Zimbabwe’s foreign currency system could be creating fresh debts for Zimbabweans who could be forced to settle them in the future, former Finance minister Tendai Biti warned yesterday.
Biti, whose tenure as Finance minister between 2009 and 2013 was marked by double digit growth rates and economic stability, claimed that the Reserve Bank of Zimbabwe (RBZ) had no capacity to settle weekly allotments of up to US$40 million being raised by companies on the platform.
He said Zimbabweans should brace for a day when authorities turn to Parliament seeking approval for government to assume such debts.
In the past, government has assumed debts owed by parastatals, a development that has courted public outrage.
Speaking during a Zimbabwe public debt indaba organised by Zimcodd, Biti said some debts assumed by government were “dubious” because they did not have parliamentary approval.
“The Dutch auction system is becoming the conduit of corruption,” Biti said.
“Various individuals are raising multiple transactions, various shelf companies are being presented at the system and proceed to bid. People are becoming super rich from doing nothing. If someone has relatives (in high offices) then they will stamp fictitious invoices for them and they get money,” he claimed.
However, the RBZ has been releasing statements with details of beneficiaries of the foreign currency auction system to update the public about developments on the official foreign currency markets.
The RBZ has also penalised banks and other firms for transgressions on the auction system.
“The RBZ cannot afford an outlay of US$40 million a week,” Biti claimed.
“One day soon, they (the public) are going to be foisted with yet another Debt Assumption Bill,” he said.
In 2015, there was an outcry over the RBZ Debt Assumption Bill, which was passed by the National Assembly and later saw government assuming a US$1,3 billion debt accrued under the stewardship of former central bank chief, Gideon Gono.
Biti said the central bank was moving away from its core business and the country was using debt assumption for corruption purposes.
Last week, the International Monetary Fund (IMF) warned the RBZ against engaging in quasi fiscal activities.
“Debt assumption is a cover-up for corruption, it is abusing Parliament, it is unconstitutional and covering up illegalities. These are real fights people must engage in and there is need to legalise debt assumption in Zimbabwe,” Biti said
The IMF said Zimbabwe remained in debt distress, with large external arrears to official creditors although it applauded Zimbabwe’s commitment to re-engage external creditors, including resuming token payments and preparing a debt resolution strategy.
“Directors recommended further monetary tightening, given the persistently high inflation. In this context, they emphasised the need to increase the operational independence of the central bank, discontinue its quasi-fiscal operations and improve its co-ordination with the fiscal authorities,” IMF noted.
“The authorities have developed a debt resolution strategy and started token payments to creditors in a bid to make progress on re-engagement. Directors commended the authorities for their swift response to the COVID-19 pandemic and for stronger efforts to address macroeconomic imbalances while prioritising social support. Noting that substantial challenges remain, including extreme poverty and longstanding structural constraints, they urged the authorities to implement the necessary reforms that would foster higher, more inclusive growth and pave way for re-engagement with the international community,” IMF added.
“Directors noted that Zimbabwe remains in debt distress, with large external arrears to official creditors. They welcomed the authorities’ commitment to re-engage external creditors, including by resuming token payments and preparing a debt resolution strategy. Directors encouraged further efforts to enhance debt management and transparency.”