via Chinamasa backs Bill | The Herald February 18, 2015 by Farirai Machivenyika
Finance and Economic Development Minister Patrick Chinamasa yesterday defended the decision by Government to take over Reserve Bank of Zimbabwe debts through the RBZ Debt Assumption Bill. He said the situation prevailing at the height of the hyper-inflation forced Government to adopt extraordinary measures to save the economy.
He was responding to mixed views raised by legislators from MDC-T and Zanu-PF in the National Assembly yesterday on the need for Government to take over RBZ’s $1,35 billion debt.
“We were confronted with a situation which needed immediate responses,” he said.
“We had no time to rationalise or to make sense as what is being said by some members.”
The RBZ debt was accrued over a period the Central Bank engaged in quasi-fiscal activities at the height of the economic challenges faced Zimbabwe faced due to illegal sanctions imposed by the Western countries.
Minister Chinamasa said by taking over the RBZ’s debt, Government would allow the bank to carry out its core functions of superintending the financial services sector and to mobilise its own resources.
“The thrust of the Bill is primarily to clean up the balance sheet of the RBZ,” he said. “The RBZ is the pillar of the financial services sector and if the balance sheet is clean we can capitalise the RBZ.
“We need $200 million to $250 million to capitalise the RBZ, but we can’t do it if has a balance sheet saddled by a $1,35 billion debt,” he said.
Minister Chinamasa implored legislators to have confidence in the economy and not spread information that would deter investors.
The RBZ Debt Assumption Bill was read for the second time yesterday and Minister Chinamasa promised to come up with some amendments to make some clarifications on the schedule of creditors in the Bill.
The Bill has raised contrasting reactions in the House with Zanu-PF legislators supporting its adoption arguing that the RBZ saved the country’s economy during times of need, while those from the MDC formations want people who benefited, especially under the farm mechanisation scheme, to repay the debt.
COMMENTS
I have been trying to get a handle on the RBZ debt. My limited capacities land me to the same solution. The RBZ borrowed where they should not have borrowed. The money went, as cash and tools, to a few fat cats. Probably there were a few lean ones. Anyway, the lenders now want their money. The borrowers do not want to pay and want to hide behind a screen of secrecy.
We cannot use RBZ assets to offset this debt as this would be balloon the 1.3 billion to 2.6 billion. We cannot write off this loan for a write-off does not eliminate the RBZ’s obligation to the lenders. Government by an act of parliament is moving to accept this burden to pay the lenders. On paper this looks kosher but– the RBZ is owned by the people of Zimbabwe. Its like taking money from one pocket and putting it into a pocket with a hole then pretend that one still has the money. Why not just throw it away.
The solution is obviously obvious. Let the fat cats pay back, even the lean ones. The fat cats have the assets– take Tsvangirai– he has a house in Stathaven. Grace Mugabe- has a dairy with lots of cows. In fact all who benefitted have assets that can be attached to dramatically reduce this debt. Accountability first– this will deter future quasi fiscal maneuvers. Is there any other reasonable solution. What is happening in parliament should be quashed– this bill should fail.