Who will pay RBZ’s massive debt?

The Reserve Bank of Zimbabwe expects to realise $137 million from the disposal of immovable property and investments in local companies as it seeks to clear its $1,1 billion debt.

The Governor, Gideon Gono, told a Parliamentary Portfolio Committee on Budget and Finance investments would realise $110 million.

Analysts have questioned why Finance Minister Tendai Biti has not undertaken a full audit of the bank, as the Reserve Bank Act allows him to do, to find out exactly where the money went.

This they say would clear (or confirm) the suspicions of many that connected individuals were receiving foreign currency at official rates and bank notes in short supply and which could be changed at a premium. It would also clarify numerous reports that farm inputs were distributed along party lines

The disposal process, according to the chairman of the assets disposal committee Retired Justice Smith, would be completed by the end of the year.

However, Gono said the RBZ was still weighing the options regarding disposal of Bank Chambers and Hardwick House due to their strategic positions. The two buildings adjoin the central bank.

But chairman of the portfolio committee, Paddy Zhanda, advised the central bank to sell the buildings to realise more funds to reduce its debt.

Although a significant portion of the debt was accrued from national obligations carried out by the RBZ on instructions from government, Biti says the debt must be settled by the bank itself.

He has often accused Gono of undertaking unsanctioned quasi-fiscal operations that resulted in the huge debt.

Gono presented evidence to the committee that showed that most if not all quasi-fiscal operations were carried out at the behest of government in line with Section 6d and Section 8 of the repealed Old Reserve Bank Act.

The provisions mandated the RBZ with advancing economic objectives of the country and compelling it to carry out such activities as instructed by government.

The quasi-fiscal operations included settling debts accrued during procurement of fuel, medicine, paying off IMF arrears and procuring agricultural implements.

Discussions are underway to determine what portion of the debt government will assume, which would lessen the burden on the central bank.

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