Govt firms owe $2,2bn

via Govt firms owe $2,2bn – DailyNews Live 20 May 2015

HARARE – Zimbabwe’s cash-strapped parastatals and town councils are currently saddled with unsecured debts amounting to $2,2 billion owed to various service providers, Finance ministry’s permanent secretary Willard Manungo revealed yesterday.

He said that the obtaining depressed macro-economic environment in the country had resulted in most State-owned companies and town councils failing to pay for services rendered including flouting tax obligations to the Zimbabwe Revenue Authority (Zimra).

“In terms of debt, parastatals and councils are lagging behind even in dues to Zimra. Of this debt, $2,2 billion is unguaranteed while another $2,3 billion is guaranteed, thus government can assume the guaranteed debt,” Manungo told a Public Accounts parliamentary portfolio committee.

Zimbabwe has over 78 parastatals that include the Cold Storage Company (CSC), Industrial Development Corporation (IDC), Zimbabwe Mining Development Corporation (ZMDC) and Grain Marketing Board (GMB) among others.

These entities used to contribute 40 percent of the country’s gross domestic product in the 1990s but are currently weighing down Treasury by constantly drawing money from government. Apart from the parastatals in arrears, Manungo noted that State-owned mobile network operator NetOne and Zesa Holdings (Zesa) were among those in a position to service their debts.

Service providers owed varying amounts include Internet service providers, water provision, and power supply utilities among others while it also emerged that local authorities were also in arrears to various ministries.

“The issue of the obligations of local authorities and even some parastatals is indicated. I recall a stance Cabinet had taken to relate obligations to either remuneration relating them to what is spent on service delivery, with a 30-70 ratio being agreed on for local authorities”.

“This was to ensure that the focus isn’t on remitting remuneration costs at the expense of service delivery, that is the stance Cabinet has taken to have parastatals more consistent with the reason they are in existence,” he said.

Manungo also added that government creditors, also Zimra debtors had revenue collections facilitated by government through the Finance ministry to ensure the servicing of the liabilities.

However, Manungo noted that Treasury was currently making payments to service providers on behalf of other ministries.

Last year Finance ministry paid about $187 million on behalf of other ministries.

“It would be ideal for the money to be disbursed to the various respective ministries so that they can pay their various dues,” Manungo said.

The Treasury secretary also said there were many anomalies in the current fiscal system that had been left by the erstwhile Finance minister Tendai Biti and his team.

From the committee, it emerged that the ministry was producing unreliable figures for the service of public debt, with the figure reflected on the statement of public debt and consolidation revenue fund for servicing of debt being pegged at $13,5 million and $49,2 million respectively for the year to December 2013.

According to the Auditor General Mildred Chiri’s report, the ministry of Finance does not have a public assets register with details of loans investments that were made to parastatals, private sector and various organisations in 2009.

In her report, Chiri also said the Finance ministry had made transfers from the unallocated reserves amounting to $251 million from a budget allocation of $96 million leading to an unauthorised excess transfer of $155 million.