via Government moves to stem rot at parastatals July 25, 2014 by Ndamu Sandu
GOVERNMENT plans to amend the Public Finance Management Act to give the Ministry of Finance and Economic Development more powers to oversee parastatals and local authorities as far-reaching reform to stop the rot at the entities.
This comes when good corporate governance practices have been alien at parastatals with some having gone for years without producing audited financial results.
In a letter to the International Monetary Fund (IMF), Zimbabwe said the amendments would require all public entities to submit their corporate and financial plans to the Finance and Economic Development minister before the beginning of the new fiscal year.
“The Minister of Finance and Economic Development will be given powers to direct boards to amend the corporate and financial plans if necessary,” Zimbabwe said in a letter to IMF managing director Christine Lagarde.
The letter was jointly signed by Finance and Economic Development minister Patrick Chinamasa and Reserve Bank governor John Mangudya.
Zimbabwe said the amendments would “direct public entities to submit quarterly financial statements and performance reports not later than 30 days after the end of the respective quarter”.
“In addition, we have started reviewing the Procurement Act, with the objective of tightening our public procurement framework and making it more transparent,” it said.
Government has been turning the screws on parastatals and local authorities after revelations that some executives were earning fat salaries and allowances when their entities were loss making and staff at the lower ranks unpaid for months.
In March, government announced that it was capping salaries of parastatals and local authorities’ bosses at $6 000 per month.
The directive could not be implemented as it had no legal force.
Early this month, Chinamasa announced that Treasury would have the final signature on loans contracted by local authorities and parastatals to curb the recurrence of borrowings not meant for key projects like infrastructure.
Zimbabwe is reeling from a total domestic and external debt of $9,9 billion which it was failing to service militating against efforts to get fresh lines of credit needed to reboot the economy.
Of the total debt, $6,9 billion is public and publicly guaranteed meaning that it had been secured with government guarantees.