RBZ awaits Debt Assumption Bill approval

Senior Business Reporter
THE Reserve Bank of Zimbabwe says it awaits passage of the Debt Assumption Bill in Parliament in order to start its operations on a clean balance sheet.The central bank Governor, Dr John Mangudya, told a Parliamentary Portfolio Committee on Finance and Economic Development this week that the passage of the Debt Assumption Bill in Parliament would result in government taking over the RBZ debt.

If done, he said, this would see the central bank reverting to its core business.

Earlier this year, Cabinet approved the takeover of $1,35 billion RBZ debt by government, a development expected to pave way for the smooth recapitalisation of the bank.

Since the adoption of a multicurrency system in February 2009, concerns have been raised over the failure by the Reserve Bank to resume the Lender of Last Resort function, one of its core functions.

Presenting the 2014 national budget in December last year, Finance and Economic Development Minister Patrick Chinamasa said the Debt Assumption Bill would be introduced in Parliament to provide for the necessary legal framework.

He said: “The next step to restore confidence in the financial sector is to capitalise the Reserve Bank.”

Chinamasa said assumption of the RBZ debt by government was a critical process to free up the central bank’s balance sheet before capitalisation.

An economic commentator, Wendy Mpofu, said it was critical to have the Debt Assumption Bill passed in Parliament expeditiously in order to capacitate the Reserve Bank.

“It is our hope that the passage of this Bill will be done speedily in order to restore sanity at the central bank. At the moment, the RBZ is unable to perform the Lender of Last Resort function due to operational challenges facing the bank. In addition, the bank has also not been able to perform the banker to government function,” she said.