‘We can’t pay RBZ debt’

via ‘We can’t pay RBZ debt’ – DailyNews Live 28 September 2014 by Ndakaziva Majaka

HARARE – Zimbabweans are dismayed by government’s move to consume over $1,35 billion in debt on behalf of the Reserve Bank of Zimbabwe (RBZ) as this will see taxes on ordinary citizens doubling.

Although analysts say the government does not have capacity to assume the RBZ debt as it is already overburdened with foreign debt, public hearings have been held and the bill would soon be debated in parliament.

They argue the central bank must first carry out an audit and liquidate its non-core assets before government assumes the debt.

Cade Zvavanjanja, a local analyst with Greeyps Risk, Efficiency and Development Consultants says the RBZ must liquidate its non-core assets like the big building they are operating from, their sports clubs plus the gold coins we hear about.

“They need to trim their employees to match the current situation,” he said.

Zimbabwe Coalition on Debt Development official Israel Mabhoo believes when RBZ was amassing such a debt they had a plan B. “What was the plan? I am sure they had collateral. They should come clean and service their debt.”

Mabhoo called on government to first invest in a public debt audit before transferring the debt to poor Zimbabweans.

“In Zimbabwe the poor always bear the brunt of careless government decisions, it is unfair for people who did not even benefit from these loans to be compelled to repay them.

“Let them conduct an audit, receipt those who benefited and pursue them to service the debts because they are just a handful,” Mabhoo said.

The Bill seeks to provide settlement of certain liabilities incurred by the central bank. In terms of the Bill, the State will assume the debts which were incurred by the RBZ before December 31, 2008.

According to the Bill, 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 which the government has proposed to assume.

Analysts have even predicted a tax hike if parliament adopts the proposed bill.

“Currently the situation is that RBZ has no capacity to service bonds. Although government has offered to assume central bank debt, they are too broke to service these debts.

“So the only option of getting this money apart from a free bailout package would be to levy more taxes,” said Zvavanjanja.

Mabhoo said the only route the cash-strapped government would take to service the loans would be to “tax poor Zimbabweans to death”.

On its part government has offered to issue out Treasury Bills (TBs) to service the debt accumulated during the country’s hyperinflationary phase. The TBs will mature after three and five years and depositors can cash in.

While Public hearings have been conducted by the Parliamentary Portfolio Committee on Finance and Economic Development to get input from stakeholders on the legislation; informal traders and other ranks in the country say they were not aware of the hearings.

Richard Murombedzi, a vendor was furious at government’s move when interviewed by the Daily News on Sunday.

“Do you in your right mind think that we would have been here selling our wares as government plots to shove down our throats, a debt that is not even ours?

“Go and tell whoever is responsible that enough is enough. During the time they were giving each other money we were wallowing in poverty. I have a Master’s degree and I sell second hand clothes for a living, and you think I will agree to this stupid debt?” Cecelia Pakamhara, who operates from Charge Office flee market said government was irresponsible in offering to assume the debt.

“What is this we hear that the very man who is chairing the committee conducting these so-called hearings is part of the debt?

“Please do not waste our time. Where in the world has it ever been done? How can you just pass a debt over like that? It is irresponsible and those responsible must repay their dues,” Pakamhara said.

According to media reports, the chair of the legislative committee leading the exercise, David Chapfika is allegedly a beneficiary of the central bank’s controversial agro mechanisation scheme that led to the debt accumulation,.

Tendayi Chakauya, an airtime vendor said he feels government was letting locals down.

“I have seen headlines and stories from a colleague who sells newspapers. I feel the government is taking advantage of our ignorance to impose this debt on the nation.

“It is simple the way I see it, they should just arrest those failing to repay and from what I understand they are affluent. I am sure they will pay if government puts the same effort into collecting the money,” Chakauya said.