THE Reserve Bank of Zimbabwe (RBZ) Debt Assumption Bill sailed through the second reading stage in parliament last week after a heated and acrimonious debate along party lines. Indications are that the National Assembly will approve the Bill at its third reading despite resistance from opposition legislators and calls for transparency by ordinary Zimbabweans.
If approved, government will take over the central bank’s controversial US$1,35 billion debt incurred before December 31 2008 mostly through the bank’s quasi-fiscal activities.
The Parliamentary Portfolio Committee on Finance and Economic Development chaired by Zanu PF’s David Chapfika has recommended that the Bill be adopted, while fellow Zanu PF legislators, who enjoy a majority in parliament, are also in favour of the move, making adoption of the Bill a mere formality despite spirited and protracted protestations from opposition legislators.
However, although the inheritance of the debt could be a positive development in that it would enable the central bank to have a clean balance sheet thus allowing it to attract international financial capital while focusing on its core business of being lender-of-last-resort, analysts say authorities need to ensure transparency by revealing the bank’s debtors and what they owe.
The RBZ has provided parliament with a profile of its creditors, but for some reason, the profile of the debtors has been withheld. So naturally, Zimbabweans are asking why the debtors are not being named if everything is above board, moreso given that the government wants to inherit the debt making it the taxpayer’s liability.
But the committee has urged parliament to approve the Bill to allow the central bank to concentrate on its core business, despite highlighting a number of anomalies pertaining to the debt which, for transparency’s sake, should be addressed before the Bill is adopted.
Chapfika’s committee expressed concern that the verification and validation process of the debt had not been completed at a time parliament is considering the Bill.
The Zimbabwe Debt Management Office in the Ministry of Finance and the RBZ are supposedly working on this process, but one would have expected them to first finish the work before the Bill was presented and debated in parliament.
“The committee observed glaring anomalies in the schedule of the Bill with regards to the quantum of the capital sums and the interest rates applicable if any,” said Chapfika in his report.
“For example, the FBC Afrexim-bank loan amount of US$ 1,7 million has an outstanding debt listed as US$ 43,7 million, ASP Marketing whose loan amount of US$25,8 million with interest pegged at one year Libor +2% has amount payable surprisingly listed as US$41,2 million. Amounts due to several FCA (foreign currency account) corporates are US$70,5 million yet the amount payable rose to an astronomical US$131,88 million.”
If the debt management office had done its job timeously such inconsistences would have been picked up and addressed before the Bill was presented to parliament.
Legislators such as MDC-T chief whip Innocent Gonese have picked on this as a reason why the Bill should not be approved in its current state.
“For example, the Metallon Gold, Anglo-American and other debts have no clear explanation as to how they were incurred. It (Metallon Gold) is only described as a variance and how can parliament be expected to condone such a debt?” queried Gonese in an interview.
“We need full disclosure and explanations and those people that benefited must be made to reduce the US$1,35 billion debt.”
The chairman of the African Parliamentarians Network Against Corruption Willias Madzimure said the Bill in its current state “seeks to officialise corruption”.
He said it appeared as though there were no proper records of people who benefitted from the farm mechanisation programme, whose cost contributed to the RBZ debt.
“There is need for consensus on which debt to be covered. There are people whose foreign currency accounts were raided by the RBZ, maybe for the good of the country, and such debts can be inherited,” said Madzimure.
“There are those who benefitted from the farm mechanisation programme, particularly A2 farmers and these should pay because farming is a business. The most important thing however is that we must know who benefitted and what they benefitted.
“If it is the vulnerable such as communal farmers who benefitted and are protected that’s fine, but A2 farmers should pay because they are in business. If we don’t do that we are setting a dangerous precedence.”
The public, as evidenced by public hearings conducted by the portfolio committee, is also against the adoption of the Bill unconditionally mainly because of issues around transparency and the fact that the Bill does not address the concerns of ordinary people.
Hearings conducted in Mutare, Bulawayo, Gweru and Harare in September last year revealed the public’s opposition to the Bill.
People also made it clear they prefer that beneficiaries of the farm mechanisation programme, who include ministers, top civil servants, top security bosses and other high-profile individuals, pay for what they owe.
There are allegations that President Robert Mugabe’s family and almost all senior government officials benefitted from RBZ’s quasi-fiscal activities, hence the desperate attempts to conceal beneficiaries, but this should not be tolerated in a democracy — the reason Zimbabweans want full disclosure.
Public opinion is, however, at sharp variance with the committee’s recommendations.
“… Whereas evidence received by the committee from the public included calls that beneficiaries of the farm mechanisation programme be made to pay for the machinery and equipment they received, the committee’s position is that there be no payments by beneficiaries because the programme was noble as it anchored the land reform programme,” said Chapfika, in his report to parliament.
Analysts say this begs the question why the committee held public hearings in the first place as it is now vetoing people’s views.
The public also wants government to compensate people whose FCAs were raided by RBZ when the country was facing acute foreign currency shortages.
“The majority of the submissions were highly critical of the Bill in its current form for failing to address the position of individuals’ foreign currency accounts whose monies were transferred to RBZ by banks following a directive from the central bank,” noted Chapfika.
“As such, members of the public viewed government as prioritising corporate creditors and ignoring ordinary people such as pensioners who lost their accumulated savings with insurance companies and those who lost funds when the RBZ unilaterally removed zeros, thereby further impoverishing innocent Zimbabweans.”
The committee expressed concern that small creditors had not been included, the majority of who are indigenous businesses whose operations have been grievously affected with some collapsing as a result of money owed to them by the RBZ.
Transparency International Zimbabwe chairperson Loughty Dube said public resistance to the Bill is justifiable considering the veil of secrecy surrounding it.
“Whenever public funds are involved, there is a need for transparency and accountability,” he said. “In this case, public funds will be used to pay off the debt so information on the debt profile should be public information. The debt should be published, even in the media so that people know who owes what. You cannot put the burden on the public without being open. People are simply asking for a breakdown of the debt. They want to know who owes what and that is totally justifiable.”
Dube said although government could justify the recommendation that those who owe the RBZ should not pay up, there is no justification of withholding information on how public funds were used.
Analysts say in the interest of transparency, accountability and the people’s solicited views, government should ensure that the Zimbabwe Debt Management Office verifies and validates the debt before the Bill is passed. In the same regard, RBZ’s debtors, regardless of their status, should also be revealed to the public before government inherits the massive debt.