Government to monitor loan, investment deals

via Government to monitor loan, investment deals | The Herald 25 July  2014

Government is working on modalities to supervise the implementation of loan agreements and investment deals entered into by ministries and other State institutions following cases of abuse of funds and violation of agreed terms in some of the deals. This was said by Finance and Economic Development Minister Patrick Chinamasa on Monday when he appeared before the Portfolio Committee on Budget and Economic Development.

He was responding to a question from Kambuzuma legislator Mr Willias Madzimure on what Government was doing to curb abuse of funds meant for capital projects.

This followed reports that Harare City Council officials bought luxury vehicles worth US$2 million using a loan from China Exim Bank meant to upgrade Harare’s water and sewerage infrastructure.

“As problems arise they help us to know where to fix and one of the issues that we also been raising with my ministry is we sign for a loan and the moment we have signed for it no one monitors to see how that loan was used.

“What you are raising about Harare City Council is lack of monitoring mechanisms, where have we put our money? Whether borrowed or money that we have raised from our own revenues,” said Minister Chinamasa.

“So it is very important to put monitoring mechanisms and I was also discussing it at our ministry about investments. ZIA (Zimbabwe Investment Authority) reports from time to time that we have these investments and so on and no one monitors whether those investments have been established or not and sometimes people who registered for investments are doing something else which is not what they registered with ZIA or are into retail business when in fact they said they had to come to do some value addition.”

He said there was need to have sufficient monitoring mechanism.
“So those are the things that we are looking at with a view to ensuring that there are sufficient monitoring mechanisms to follow up where our money is.”

Minister Chinamasa said a debt management office was being established to manage the country’s domestic and foreign debt.
It will also be responsible for approving and guaranteeing loans incurred by line ministries and State institutions, parastatals and local authorities.

“It is important basically that we have transparent procedures on how to incur our debt and I am not just referring to domestic debts. How debts incurred by our local authorities, by the Government by ministries and so forth. I have already got approved principles to set up a debt management office which will reside in my office,” he said.

“It will have a database of all the debts that we incur, all the guarantees that we give and it will set out what procedure to follow when we incur debt. But primarily we are basically designating the Ministry of Finance to be the sole borrowing power on behalf of the Government.”
Minister Chinamasa said his ministry would have the final say on all debts.

“So any State enterprises that may want to borrow money they have to go through their line ministry and the line ministry with the Minister of Finance and thereafter we can then okay whether debt is to be incurred or not.

“This, to try to bring some sanity because if we where to allow everybody to sign I will be surprised with debts which have been incurred on our behalf which we have to be responsible but maybe the purpose for which they have been incurred is more consumptive than infrastructural,” he said.

Zimbabwe has a combined domestic and foreign debt of approximately US$9,6 billion while Government has guaranteed a number of loans that some parastatals have entered into like the US$320 million loan for the expansion of Kariba Power Station.