AFTER the parliamentary portfolio committee on budget and finance this week demanded an investigation into how the Reserve Bank of Zimbabwe (RBZ) accumulated a staggering US$1,3 billion debt at the height of hyperinflation and the country’s economic meltdown, former RBZ governor Gideon Gono came out to explain how the controversial liability was accrued.
Chairman of the budget and finance David Chapfika and his colleague Munyaradzi Kereke, who is Gono’s former advisor, grilled Finance minister Patrick Chinamasa over the issue, demanding an explanation and investigation into the issue. They implied that the debt could have been inflated hence the need for a probe.
The opposition MDC formations this week described as “criminal” and “odious” government’s plans to adopt the RBZ debt.
Responding to queries from the Zimbabwe Independent on how the debt was accumulated, Gono said he is willing to provide details on how the liability was accrued.
“Over the past few days there has been renewed interest in and discussion of the RBZ US$1,3 billion debt on different forums, particularly the parliamentary portfolio committee on budget and finance,” Gono said.
“I’m and have always been willing to explain how the debt was accumulated over the years and offer ideas on how the issue could be resolved.
There have been many distortions on the RBZ’s debt profile in question and we need to set the record straight.”
He said it was important to understand that the RBZ debt can be broken down into pre-independence liabilities, debt that was accrued between 1980-2000 such as IMF/World Bank/ADB debt during ESAP days; the so-called Miekles, Anglo-American/Malaysian and other debts of 1998-2000; then the 2003-2008 and post 2008 debt figures all of which combine to make the $1,3 billion debt.
Gono said when he became governor on December 1, 2003 against a backdrop of a mountain of challenges that lay ahead in terms of foreign exchange availability to meet the government requirements, it became an imperative that over and above the erratic export-surrender levels that the RBZ on behalf of government imposed on exporters, additional foreign currency had to be mobilised from various sources.
“To succeed in this resource mobilisation exercise and in the interest of good corporate governance, institutional memory and proper agent/master-relationship between RBZ and government as represented by the Ministry of Finance, we at RBZ at the time asked for specific letters authorising us to mobilise forex resources for government, with limits being placed by government in relation to how far and how much the Ministry of Finance wanted RBZ to mobilise on its behalf,” he said.
“This we insisted upon in order to avoid the kind of irrational debate we are currently having as a nation.”
Gono said he hoped his explanation would lay to rest the issue which has been lingering for years now.
Gono gave a breakdown of the RBZ debt as follows, starting with debts owed to central banks before he left:
South African Reserve Bank (contracted and rolled over since 1979) — US$10 million;
Bank Negara — Malaysian Central Bank (contracted June 1991-Sept 2000) — US$49,8 million;
Reserve Bank of Malawi: Grain Importation Facility (contracted 2006/7) — US$20,4 million.
He said the total amounts owed to other central banks were US$80,2 million
Debts owed to External Financial Institutions/ Suppliers/Corporates/Governments
Regional and continental banks and corporates who provided roll-over facilities for grain, fertiliser and oil importations (prior to 2003 US$55,1 million) — US$122,2 million;
Equatorial Guinea, Fuel Importation Facility (contracted 2006/7) — US$220,8 million;
Eximbank China, Farm Implements from US and South Korea and Farm Implements (contracted 2006/7) – US$44,4 million;
Other Government authorised and contracted suppliers of grain, seed and fertilisers (contracted 2005- 7) — US$171,2 million.
The total amounted to S$561,6 million.
Debts owed to local financial institutions
Financial Institutions Corporate (Private Sector) FCA Deposits (contracted 1996 – 2003 US$295,2 million) — US$359,8 million,
Local Banks Statutory Reserves (2007/8) — US$ 79,9 million
Total — US$439,7 million.
Gono said the grand total the RBZ owed to the creditors as verified by external auditors and IMF as at June 30, 2010 was US$1 082,5 million (US$1,1 billion). Combined with interest, the debt becomes US$1,3 billion in total.
Gono said it must not be forgotten that government actually owed the RBZ US$1,4 billion which was not paid during his tenure.