Source: Mthuli ordered to disclose real debt – The Zimbabwe Independent July 19, 2019
BY BRIDGET MANANAVIRE
PARLIAMENT has given Finance minister Mthuli Ncube up to September 30 to disclose the terms and conditions of all public loans and loan guarantees that have not been published, with legislators casting doubt over the country’s foreign debt, which they say is grossly understated.
In its first report on compliance issues for Treasury, the Parliamentary Portfolio Committee on Public Accounts, chaired by Harare East legislator Tendai Biti, said the country’s accounting records were in a shambles.
According to the report, the true extent of the country’s debt is unknown, with Treasury providing varying figures. According to the latest figures from the Reserve Bank of Zimbabwe (RBZ), the total debt stood at US$23,53 billion as at January 2019. What has worsened the confusion is that the total domestic and foreign debt of US$17,69 billion as at August 2018 reported in the 2019 Budget Statement was different from the US$9,2 billion reflected in the 2019 Budget Estimates. “The Committee also noted that some external debts were improperly classified as domestic debt. Examples include China Nanchang Engineering, China Interl Water and Electricity and RBZ—/Zisco/Dutch, Mota Engil and HCCL (Hwange Colliery Company Limited) Creditors and PTA Bank among others. It was further noted that all the loans obtained/debts incurred should have been presented to Parliament for approval as these were acquired outside the budget,” the report reads.
“The Minister of Finance and Economic Development must cause the terms of loans contracted and guarantees to be published in the Gazette by 30 September 2019. This applies to loans and guarantees that were not previously published.”
The legislators recommended that Ncube presents the first report on the performance of loans and guarantees in 2019 to parliament by August 31, 2019.
This comes as Treasury has been accused of being dishonest about its borrowings, giving out varying figures which have confused the nation. Zimbabweans have been up in arms with the government over clandestine borrowings which have left the country almost bankrupt.
Most international lenders have blacklisted the country over failure to pay its debts.
The government has been struggling to nail down a debt clearance roadmap which involves urgently clearing US$2,6 billion in arrears before securing US$1,2 billion in bridging finance from multilateral institutions.
Finance ministry permanent secretary George Guvamatanga informed the committee during an oral evidence session that most of the loans and guarantees were contracted by the previous administration.
The Biti-led committee also noted deliberate non-compliance with the laws, where the ministry would borrow money without consulting parliament.
Legislators also want Ncube to present the second report for 2019 and a comprehensive statement of the public debt in Zimbabwe at the time the Estimates of Revenue and Expenditure for the 2020 financial year are laid before the National Assembly.
The committee expressed concern over non-disclosure of debts after it experienced difficulties in obtaining debt information from government.
“The committee requested a consolidated statement of debt. This was belatedly submitted to the committee. The committee attaches hereto, as appendix A, the statement which reflects yet another figure for public debt,” the report reads.
The public debt management office was also said to be compromised because it is a department in the Ministry of Finance. The committee said it would be more effective as an independent standalone board established by an Act of Parliament.
“The committee’s finding was that government had been non-compliant with section 11(2) of the Public Debt Management Act by exceeding the borrowing limit of 70% to gross domestic product (GDP), before rebasing of the GDP figures. The Committee noted that parliament had not approved by resolution or by means of a provision in a Finance Bill the aggregate amounts that would be borrowed in any financial year by way of loans. The Ministry of Finance should comply with the laws of Zimbabwe and bring before Parliament the proposed limit for 2019 borrowings by 31 August 2019,” the report states.
Taxpayers have been burdened with the country’s debt.
In 2015, government assumed the central bank’s US$1,35 billion debt after the passage of the Reserve Bank of Zimbabwe Debt Assumption Bill despite spirited opposition from the public and opposition legislators.
This was after the RBZ and government refused to disclose the debtors (mainly top chefs) who benefitted from the debt assumption.
In the report, the Public Accounts Committee recommended that all future borrowings by the government must comply with the requirements prescribed and satisfy the conditions set out in the Act. Non-compliance by the ministry undermined public administration in Zimbabwe and the functioning of a modern state. It also undermined transparency and accountability, according to the report.
“The Minister of Finance and Economic Development must amend the Public Debt Management Act so that the sole contracting agent for debt becomes the Minister of Finance and Economic Development, acting on behalf of His Excellency, the President and subject to the Constitution,” the report reads.
“The Minister of Finance and Economic Development should propose a limit that can be guaranteed for the financial year 2020 by 30 September 2019. The National Assembly should consider the proposal and approval should be done by 31 December 2019 or through the approval of the Finance Bill for 2020.”
The report was compiled after the committee studied the 2016 Audit Report by Auditor-General Mildred Chiri, the Follow Up Report on Recommendations made in the 2016 Auditor-General’s Reports on Appropriations and Fund Accounts and State Enterprises and Parastatals.
The committee also went through the 2017 Reports on Appropriations and Fund Accounts, State Enterprises and Local Authorities and also received oral evidence from the accounting officer; George Guvamatanga, Accountant-General Daniel Muchemwa and other officials in the ministry.
Apart from being disappointed by the accounting books, the committee members were unimpressed by the lackadaisical and indifferent attitude of Muchemwa, as well as Guvamatanga’s conduct, particularly his tone and demeanour.
The ministry also failed to fully cooperate with the committee. “Having gone over the evidence, the committee found that the there was an entrenchment of a culture of non-compliance by the Ministry of Finance and Economic Development officials and indeed by other ministries in government. Having found the above, the committee concluded that in some instances, there was deliberate and wilful breach of the law and in other instances there was total ignorance of the law and negligence or indifference,” reads the report.