adminWhile it is prudent to clean the Reserve Bank of Zimbabwe balance sheet to strengthen the bank’s capacity, Government should avoid burdening already stretched taxpayers.
Last week, the Parliamentary Portfolio Committee on Finance and Economic Development conducted hearings into the RBZ Debt Assumption Bill which will culminate in legislation that will allow Government to take over the central bank’s US$1,3 billion debt.
This is a noble idea as it will assist the central bank to start on a clean slate and strengthen its balance sheet to be able to discharge the lender of last resort function. For the health of the financial services sector, it is critical that the RBZ be capacitated.
The RBZ Debt Assumption Bill seeks to provide settlement of certain liabilities incurred by the central bank. The debts that the State is scheduled to assume have been listed in the Bill.
However, debt assumption should only follow a thorough due diligence exercise to ascertain the exact amounts, beneficiaries and purpose to which the monies were spent. It is critical for the Government to satisfy itself and the public on how and why the debts accrued.
It is against this background that we applaud Parliament for taking the Bill to the public for scrutiny through the hearings since they, as taxpayers, will shoulder the pain of clearing the debt.
It is important to note that the Government’s resource base is limited while the tax payers are stretched already.
The measures to be used to clear the debt should not be oblivious to this, hence there must be a thorough audit of the debts and where it is established that the beneficiaries of the support advanced under the quasi fiscal activities can be identified, the central bank should recover through normal debtor-creditor procedures.
We assume that the beneficiaries of such activities can be traced and therefore should be made to pay. Government and tax payers should not be made to shoulder costs incurred by some people who are able to pay.
The due diligence exercise should be transparent to give confidence to the taxpayers who will feel the pain of servicing the debt.
Secondly, the schedule released last week shows that Government has not yet established the purpose to which some of the funds were applied. This calls for thorough interrogation of such allocations before the Government assumes the debt. It will not be in Government’s interest to take over a debt when it is not satisfied with the way it was accrued.
Government should give the necessary information to the taxpayer to ensure buy in.
Those who received farming implements should surely pay for we assume that they are indeed farmers otherwise why should some taxpayer who did not benefit from the facility be made to pay?
The mechanism for the debt assumption should also be looked at so that it does not short-change other critical sectors of the economy. For instance, the central bank has been given immunity from prosecution for instructing banks to transfer funds from foreign currency accounts while banks have not been extended immunity and this has exposed them to a litany of lawsuits. Who shall pay interests accrued on the FCAs following the RBZ directive of 2007 for banks to transfer money from the FCAs?
While the central bank, which used the foreign currency then, is shielded from litigation, which we understand to protect its status, the banks which did not use the money have to face the music on behalf of the central bank.
We call for dialogue between the bankers, RBZ and Government before the debt is taken over. These grey areas should be clarified.
This is not a Bill that must be shoved down the people’s throats. It must receive consensus and so far that consensus is lacking.
We call upon the Minister of Finance and Economic Development to look into some of these issues and revisit the due diligence exercise so that we do not lose the buy in of the tax payers.
Online Reporter