Parastatals Prepare For Life After Quasi-fiscal Activities

PARASTATALS this week said they had come up with survival measures for next year to ensure that they remain viable should the central bank governor Gideon Gono stick to his word of not supporting them through quasi-fiscal activities.

Speaking to businesdigest, Zimbabwe National Water Authority (Zinwa) spokesperson Tsungirai Shoriwa said although they have been receiving financial assistance from the central bank they did not entirely depend on that money.

“The Reserve Bank of Zimbabwe assisted often, especially when we had serious problems such as the cholera outbreak,” Shoriwa said.

“We have come up with measures that will ensure we remain viable in the future. Zinwa has been granted authority to bill all corporates in foreign currency. We are hopeful that this development will improve foreign currency inflows for chemicals and other repairs.

“We have written to government to allow parastatals to charge viable tariffs to ensure we remain viable, because most of the tariffs being charged by parastatals are sub economic,” he said.

Shoriwa said Zinwa had the mandate to provide consultancy to those constructing dams on farms and if they were allowed to charge viable service fees, they would not appeal for funds from the central bank.

Speaking to business stakeholders at a business conference hosted by the National Economic Consultative Forum (NECF), Gono said parastatals such as Tel*One,  Net*One, Air Zimbabwe, Zinwa and Zesa had become a burden to the central bank.

“Zimbabwe is the only country in the world where telecommunications are a burden to the government,” said Gono.

Gono said the central bank was continuously funding Net*One and Tel*One’s international connections.
He said mobile networks should stop subsidising subscribers but instead charge viable tariffs to ease congestion because it was not a “force matter to have a mobile phone”.

National airline Air Zimbabwe is likely to increase their rates next year as they will not be getting any foreign currency assistance from the central bank starting next year.

According to Gono, Air Zimbabwe has been one of the biggest spenders gobbling up between US$3,7 million and US$4,5 million every week.

Gono said this year alone, the airline has spent no less than US$95 million from the Reserve Bank because they have not been charging in foreign currency.

“Starting next year, Air Zimbabwe should not bring their weekly bills to the central bank and travellers should be prepared to meet the true cost of travelling,” Gono said.

Net*One however dismissed claims by the central bank governor that he has been “continuously funding them”.

Net*One managing director, Reward Kangai said the group’s operations have always been self-funded. Although they have on some occasions received financial assistance from the central bank, “they will not at all be affected by the absence of funding from by the central bank”.

“Net*One has only been requesting for assistance from the Reserve Bank for access to foreign currency to pay its foreign suppliers of goods and services but has always paid for that foreign currency using its local currency,” said Kangai in a written response. “Net*One operations have therefore always been self-funded,” he said.

“The business of mobile communication operations requires almost 95% capital and working capital in foreign currency most of our equipments are not locally manufactured and software support services are payable in foreign currency,” Kangai said.

“The move by the Reserve Bank of Zimbabwe to issue foreign currency licences to mobile operators in Zimbabwe, including Net*One will therefore not only assist the operators to meet some of their operational costs but also capital expenditures.

“Thus, the intended reductions of quasi-fiscal activities by the monetary authorities should not negatively affect Net*One at all,” said Kangai.

Analysts however said Gono might not meet next January’s deadline that brings an end to the bank’s involvement in quasi-fiscal activities despite promising an end to the supra-ministerial interventions.

Analysts said delays in forming an inclusive government and the absence of a national could force Gono to perpetuate quasi fiscal activities aimed at bailing out the heavily indebted government.

Expressing sceptism in Gono’s remarks, University of Zimbabwe political science professor Eldred Masunungure said the Reserve Bank could continue with its “ill-advised policies”.

“He should not have undertaken the policies in the first place,” Masunungure said. “In my view those were outside his jurisdiction. The fact that he is abandoning them is however salutary bearing in mind that he should have started carrying out the policies.”

“It will be extremely difficult to stop those activities given the ongoing delays in forming an inclusive government and the absence of a national budget. I do not see the talks being concluded in January.

I think that will be very optimistic and in the absence of a budget the Reserve Bank may be compelled by default to intervene,” he said.

BY JESILYN DENDERE

Top