FINANCE minister Tendai Biti says government was divided on how to handle the Reserve Bank of Zimbabwe (RBZ) debt, adding he was demanding accountability before a settlement plan is executed.
Speaking at the inaugural Independent Dialogue — an initiative of the Zimbabwe Independent — on Wednesday, Biti said some ministers were
opposed to his push for an inquiry into the central bank debt.
He said the proposed RBZ debt settlement plan had torn cabinet apart, with some ministers against efforts to account for how the debt was accumulated.
Biti said the ministers differed on a modus operandi for repaying past debts incurred by the financially beleaguered central bank.
The RBZ accumulated a massive debt when it engaged in quasi-fiscal activities before the formation of the coalition government.
Central bank governor Gideon Gono in July this year said the apex bank contributed US$1,2 billion of the country’s US$6,4 billion external debt and payment arrears.
Biti said: “The issue of RBZ debt has been seriously politicised in cabinet. What I proposed as Minister of Finance is that let us create a special purpose vehicle in respect of which we will transfer all the debts of the RBZ. But this special purpose vehicle should be able to take all the debt and also to its credit take the quasi-fiscal assets of the bank — the assets and so forth.”
He said politics had prevailed over reason on the matter.
“The politicisation has been that there are some who feel that government should take over this debt without asking any questions. But more importantly, this is where there will be a fight and it’s a matter of principle for me that no one can force me to change.”
He said government should follow due process that quantifies the amount of debt and requires another “legal instrument” to legitimise the central bank debt.
“Some people think that we want to investigate the Reserve Bank. I have got those powers in terms of the Reserve Bank Act. If I wanted to do it I would have done it last year. My mindset is that let us be forward-looking,” he said.
Gono in April last year published a 20-page newspaper supplement that showed the apex bank’s controversial engagement in quasi-fiscal activities on behalf of government.
The supra-ministerial interventions which included bailing out perennial loss-making parastatals, availing farming equipment to new farmers and funding political processes such as elections, resulted in individuals, NGOs and business losing millions of United States dollars to the central bank.
Biti said government should appoint an administrator who can “prove and approve” claims made by central bank debtors for government to inject funds into this vehicle.
The debtors, Biti said, will be rated accordingly.
“I would reckon that class A would be your sovereign creditors like Afrexim Bank, PTA Bank. Class B could be domestic creditors — people who woke up in the morning and found their monies gone. Class C could be risk-takers — those who took a risk with the bank and took quasi-fiscal activities, not having read the provisions of the Reserve Bank Act,” said Biti.
Some of the central bank’s creditors are platinum mining giant Zimplats (US$34 million), the Commercial Farmers Union (US$20 million) and other mining companies that are yet to benefit from an underfunded special bond set up in April to settle the debt.
The central bank has in recent months been under increasing pressure from creditors some of whom have attached the bank’s properties.
Following the relentless pursuit by creditors of the central bank, President Robert Mugabe in June invoked a statutory instrument that made the bank immune from any court action that could result in the sale of its assets to pay off creditors.