TREASURY is set to settle a part of external debt owed by the Reserve Bank of Zimbabwe (RBZ) in 2022, through the Reserve Bank of Zimbabwe (Debt Assumption) Act.
PRISCA TSHUMA
The law was enacted to provide for the settlement of certain liabilities incurred by the Reserve Bank of Zimbabwe, and to provide for matters connected with or incidental to the foregoing.
However, the Act burdens the overtaxed Zimbabweans who must ultimately foot the bill.
According to the latest Annual Debt Bulletin for the 2022 financial year, in United States dollar terms the total external debt of the RBZ amounted to US$4.24 billion, as at the end of December 2022.
The report shows that running facilities’ debts for the year amounted to US$2.291 billion, with debts owed to financial institutions amounting to US$917.36 million.
The central bank owes bilateral financial institutions US$121.32 million, while US$72.64 million is owed to international airlines, US$103.98 million is owed to maize suppliers, US$322.41 million is owed to fuel suppliers and US$533.78 million in blocked funds is owed to the private sector.
Treasury said it was progressing to assume external obligations from the central bank’s balance sheet.
“Treasury is in the process of assuming external obligations from the RBZ balance sheet, to create a sound and robust central bank, to enable it to deliver on its core mandate of ensuring and safeguarding price and financial sector stability,” said the report.
“A Technical Committee made up of RBZ and Ministry of Finance and Economic Development staff has been established to work on the modalities of the debt assumption process, and the total amount to be assumed will be confirmed after review by the Committee.”
The National Assembly should first approve the debt assumption in line with the Public Debt Management Act.
A Debt Redemption Fund was set up to service these and other government liabilities. The government has been assuming RBZ debts since 2015 when it assumed about US$1.5 billion RBZ debt, part of which was in order to write off non-performing loans given to politically connected individuals who received loans under the US$200 million Farm Mechanisation Programme.
In 2019, it also approved the assumption of TelOne’s US$338 million legacy loans.
