Min pushes takeover of $1.3b RBZ debt

via Min pushes takeover of $1.3b RBZ debt – New Zimbabwe  27 January 2015

FINANCE minister Patrick Chinamasa has tabled the Reserve Bank of Zimbabwe (RBZ) debt assumption bill before Parliament seeking authority for government to take over the central bank’s mammoth liabilities.

According to the minister, the RBZ, during the hyper-inflation era, incurred a debt of over $1.3 billion to fund various quasi fiscal activities.

The programmes included election financing and a  farm mechanisation scheme which critics claim largely benefited members of the ruling Zanu PF party.

During consultations with members of the public, most Zimbabweans rejected the proposal for government to take-over the debt saying those who benefitted from the RBZ’s controversial programmes should foot the bill.

But Chinamsa said the debt had become a hindrance to the central bank’s supervisory activities as well as the institution’s creditworthiness to the international market.

Presenting the bill in the national assembly, Chinamasa said at least $500 million of the debt would be added to the country’s already existing foreign obligations of $6.2 billion.

“This external debt will be dealt with through international negotiations which we are pursuing with the institutions involved while the internal debt of more than $700 million will be dealt with through issues of treasury bills,” he said.

The bill presented to Parliament seeks to provide for settlement of certain liabilities incurred by the bank before December 31 2008.

Chinamasa said the Debt Management Office, a department of the Ministry of Finance which was set up in 2010, would validate and reconcile the bank’s debts and tackle it accordingly.

Under the multi-currency regime, some creditors obtained writs of execution and attached the assets of the central bank before government quickly moved in to protect the institution through the Presidential Powers (Temporary Measures) Act.