THE government will soon move to audit the Reserve Bank of Zimbabwe’s (RBZ) US$1.5 billion debt, Finance Minister Tendai Biti has said insisting the exercise was not a “witch hunt”.
Biti last week told the Parliamentary committee that the government would set up a special purpose vehicle (SPV) to establish how the RBZ – which is now technically insolvent – ended up with the huge black-hole.
“We create an SPV, we appoint an administrator at law and that administrator then receives claims by creditors but in receiving those claims, he should satisfy two things that are the legality of that transaction in terms of the Zimbabwean law,” Biti said.
“There is also the accounting issue — was debt actually incurred, where 40 bags of maize actually delivered? He is almost a liquidator in a liquidation or insolvency issue.
“What then happens is that the administrator will also receive assets from the RBZ including those who owe the bank; that is if they say we are owed by farmers for equipment.”
The huge RBZ debt has been a source of friction between treasury and the central bank with critics blaming governor Gideon Gono for the bank’s troubles.
They accuse the RBZ chief of presiding over a spending spree after assuming office in 2003 which saw the bank freely printing money and engaging in so-called quasi-fiscal operations that included funding elections, acquisition of farm implements and luxury vehicles for government officials.
Gono’s policies are also blamed for stoking inflation which reached record levels of 11.2 million percent in 2008, forcing the country to ditch a virtually worthless Zimbabwe dollar.
But Biti insisted that the move to audit the debt was not witch hunt adding it was necessary to help recapitalize the bank.
“It will also allow for the recapitalisation of the bank and it will also even give an opportunity of a debate that so far has been taboo in Zimbabwe — the partial privatisation of the bank,” he said.
“The State doesn’t have to own the central bank, the central bank is just a conduit. The South African central bank is not owned wholly by the State but people in Zimbabwe think that there is magic that comes with owning even if you are owning a rat that has kwashiorkor.”
Gono however, denies any wrong-doing arguing that all the expenditure was requested and authorised by successive Finance Ministers.
He claims the RBZ could easily liquidate its $$1.1 billion obligations if the government paid up its own debt of US$1.4 million to the institution.
In a robust defence of his policies the RBZ chief said last November: “There is belief that RBZ and my management team spent US$1,1 billion either buying tractors and scotch-carts or simply went on a debt contracting spree and blew away the money in support of non-existent programmes or at the worst, the whole amount is a Gono debt which he must find a way to repay.”
“(But the fact is) we at RBZ 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.
"This we insisted upon in order to avoid the kind of irrational debate we are currently having as a nation.”
“If government was to repay RBZ US$1,4 billion that it owes the apex bank tomorrow, the bank would in turn be able to pay its US$1,1 billion debt to creditors and still remain with US$300 million for its capitalisation, lender of last resort operations, day-to-day needs and then focus on its core mandate!”