Govt Goes Ahead To Take Over The RBZ Debt Besides Public Outcry
20 November 2020
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Business Weekly

Mthuli Ncube

The Reserve Bank of Zimbabwe (RBZ) is set to transfer several billions of the debt it holds to the Ministry of Finance and Economic Development after completing a debt consolidation exercise.

This comes after Cabinet in 2013 approved the takeover of the US$1,35 billion RBZ debts by the Government in what was expected to pave the way for the smooth recapitalisation of the central bank.

The earlier decision to have the RBZ debt assumed by the Government attracted public outcry over concerns taxpayers and corporates would bear the brunt of paying off debts they did not know how they were accrued.

Business Weekly has it in on good authority that the new planned transfer of the unspecified debt currently sitting on the books of the central bank, will make the RBZ debt free for the first time in two decades. However, the move will capacitate the bank and pave way for investment by both local and foreign investors. It will also improve the ability of the central bank to engage in fruitful commercial relationships, including the bank’s ability to mobilise significant external lines of credit needed by the country.

Efforts to get a comment from secretary for finance, George Guvamatanga, were unsuccessful this week as he had not responded to enquiries from this publication by the time of going to print.

Since its taking over the reins in 2017, the New Dispensation identified sustainable resolution of both national and domestic debt among key issues that needed to be dealt with as a matter of urgency.

In terms of total public debt, Zimbabwe has about $9,8 billion as domestic debt, while the foreign debt still stands around US$8,1 billion, with 70 percent of these liabilities being arrears.

Government is pursuing multilateral partners in its efforts to clear outstanding external debt to reopen access to concessional lending from global lenders and reestablish ties with global partners.

Upon transfer, the RBZ debt reportedly running into several billions (ZWL)will be evaluated by Treasury to ascertain whether the financial liabilities were contracted for or on behalf of the Government.

Once certified by Treasury, the debt will then be dealt with in terms of a comprehensive debt strategy the same way as other national or public liabilities are or would be dealt with.

Sources said part of the debt to be transferred to Treasury dates back 20 years ago, while a significant portion relates to legacy debts, blocked funds and obligations for services rendered to the Government.

Sources would not provide the exact debt figures to be transferred to the ministry of finance, but the central bank indicated in its July 2020 economic review that the liability had reached $366,335 billion (US$4,77bln), from $23,28 billion (US$2,5bln) 12 months earlier.

“Some of the debts go back 20 years ago. The Reserve Bank of Zimbabwe has completed

consolidation of the debt and it will be transferred to the Ministry of Finance and Economic Development.

“The process of transfer to the Ministry has started and the Ministry is now in the process of verification, once completed, the debt will be transferred and consolidated into national debt,” one source said.

Sources at the RBZ said that it was necessary for the central bank to assume the debts, especially from blocked funds, non-performing loans at banks, International Air Travel Association and services rendered to the Government, to make the country attractive once again to foreign investment.