Zim tightens screws on parastatals

via Zim tightens screws on parastatals – DailyNews Live 7 July 2015

HARARE – Zimbabwe is moving to plug leakages and reduce corruption in State-owned companies through various measures proposed under the Public Debt Management Bill.

Finance minister, Patrick Chinamasa, last week said parastatals would be obliged to report their liabilities twice per year, to promote accountability and transparency.

Chinamasa told a parliamentary debate session on the legislative piece — currently being debated by the National Assembly — that while the State-owned institutions had to report twice, government could not afford to “publish their liabilities in the local newspapers”

“They (the parliamentary portfolio committee on Finance) make reference to the reporting requirements to this august House in terms of the Constitution as well as to ensure that there is accountability by my ministry to the National Assembly.

“The new suggestion made by the Committee, I beg to differ. All Government, especially all quasi-government institutions should not publish their liabilities in the local newspapers. This is an expensive exercise,” Chinamasa said.

The Treasury chief also said that Clause 23 of the Bill had to be noted, as it clearly spells out the procedure which must be followed before a local authority or public entity can incur a debt.

Chinamasa also applauded the recommendation by the committee that borrowing limits had to be imposed on all government-owned companies.

“This is a matter which I am going to provide for in the proposed amendments. We will set some limits and leave a window to come to Parliament when the need to borrow beyond the limit arises in defined circumstances.

“There is a requirement that there should be a resolution by the governing body or council. There is a further requirement that they cannot borrow beyond a prescribed limit which the minister of Finance is mandated to prescribe,” he said.

The Public Debt Management Bill seeks to amend the Public Finance Management Act and provide for the raising, administration and repayment of loans by government and for giving guarantees in respect of certain loans.

The debt will ensure that all public borrowing will be centralised in the ministry of Finance.

As at December 31, 2014, Zimbabwe has an external public and publicly guaranteed debt of $6,8 billion and a domestic debt of $1,5 billion.

The private sector debt, which is still being validated, stands at approximately $4 billion.

Chinamasa also said the Bill mandated him to prescribe a threshold within which local authorities and public entities could borrow without reference to him.

“Beyond the limit, the Bill provides that there should be the board resolution followed by approval from the line minister as well as approval from the minister of Finance.

“I believe those procedural requirements are adequate to send and to raise awareness as to what is happening in our local authorities,” he said.

He also said that as a measure of restoring transparency in the way debt was incurred, government had widened the scope of public debt to include naturally debt incurred by local authorities and State enterprises.

“We are putting in place procedures which will ensure that debt is not incurred recklessly.

“We are also putting in place a framework which will help us build a database so that at the press of a button, we can know the state of our indebtedness, both domestically and externally,” Chinamasa said.