* Critics say c.bank policies ruined economy
* First major reform law by unity government
* Central bank governor to get immunity
By MacDonald Dzirutwe
HARARE, Nov 18 Zimbabwe's parliament on Wednesday unanimously approved a bill to reform the central bank, including reducing the powers of the bank governor accused by critics of policies that ruined the economy.
Finance Minister Tendai Biti said last week the government had failed to attract funding from foreign donors for next year's budget because they feared the money could be misused by the Reserve Bank.
The bill is the first major law to be passed by parliament since the formation of a unity government between Prime Minister Morgan Tsvangirai and rival President Robert Mugabe in February.
The Reserve Bank of Zimbabwe Bill will reduce the powers of the governor by appointing an independent chairperson and board, and restrict the bank to dealing with interest rates, currency management and regulating banks.
The governor's core function would be to chair a planned monetary policy committee.
"There have been extreme discussions with the Minister (Biti) that there be amendments ... and we have agreed on these amendments," Paul Mangwana, a member of parliament's legal committee and from Mugabe's ZANU-PF party told parliament.
The bill will now be debated in the upper Senate, and if approved would be signed by Mugabe.
ZANU-PF legislators had last week threatened to block the bill, arguing that it targeted central bank governor Gideon Gono, a Mugabe ally with whom Biti has had an uneasy relationship.
But an agreement was reached between Biti and ZANU-PF lawmakers to make changes to the bill, including a clause giving immunity to the bank governor and employees "for anything done in good faith and without negligence".
Biti had, before his appointment, been vocal against Gono, at one time calling him "the country's number one enemy".
Critics blame Gono for policies that helped cripple the economy -- stoking inflation by printing money and taking over functions of the national treasury, including buying farming inputs and extending financial support to government departments.
Tsvangirai and Mugabe are locked in a dispute on how to share power, with the former trade union leader accusing Mugabe of refusing to appoint a new central bank governor and attorney general as part of a political pact signed last year.
Mugabe has vowed that Gono will not be sacked.
(Editing by Toby Chopra)