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Zimcodd in landmark public debt victory



…Court orders minister to account

THE High Court has ordered Treasury to gazette within 12 months a Bill amending the Public Debt Management Act [Chapter22;21], after it emerged Finance minister Mthuli Ncube has been approving loans without Parliament’s authorisation, in violation of the constitutional tenet of accountability.


This comes after the Zimbabwe Coalition on Debt and Development (Zimcodd), an organisation that promotes social and economic justice, sought a court declaration compelling the government to approve loans, only after parliamentary authorisation.

According to Zimcodd, the old Act has been enabling the Finance minister to contract loans without Parliament’s approval.

“Literally, the minister was signing off loans and issuing guarantees without going to Parliament to seek approval. The Public Debt Management Act empowered him to do so, while the constitution required him to seek prior approval by Parliament.

“So there was a legislative gap and a contradiction. The High Court order therefore aligns the Public Debt Management Act with the Constitution of Zimbabwe,” said John Maketo, Zimcodd programmes manager.

The High Court ruled that the Finance Ministry Amendment Bill ought to include: “The procedure in respect of which Parliament ratifies or rejects any loan or guarantee. The procedure in which the state regularly updates Parliament on debts are ‘ obligatory loans including guarantees’.”

Zimcodd’s founding affidavit shows that the government issued guarantees for domestic creditors amounting to ZW$20.2 billion and US$1.4 billion without Parliament’s approval in 2021 alone.

The document also shows that the government has for several years been approving loans and contracts without authorisation.

“As recent as the 12th of March 2021, through General Government Notice 367/2021, 368/2021, 369/2021, 370/2021, 371/2021 the 1st Respondent (Finance Ministry) issued various guarantees to different companies,” reads the affidavit.

“In all these guarantees, the approval of Parliament was not provided yet the guarantees provided by the 1st Respondent are levies on the Consolidated Revenue Fund. On the 25th of November 2021, during the presentation of the 2022 budget statement, the 2nd respondent tabled a separate document headed ‘Statement of Public Debt’.

“That document, disclosed that during the period of January to September 2021 Government had issued guarantees for domestic creditors amounting to ZW$20.2 billion and US$1.4 billion.

“In 2020, government had issued domestic guarantees to private companies totalling ZW$24.2 billion … and a 77% recovery rate for guarantees in respect of CBZ Agro-Yield (Pvt) Ltd for farmer only a 0.6% recovery in respect of CBZ Agro-Yield loans to farmers and a 22% recovery to farmers for the 2022 one agricultural season and only 13.2% recovery for 2020-2021 finance to soya beans farmers.”

In terms of the current law, Treasury is empowered to provide guarantees in term of Section 20 of the Public Debt Management Act [Chapter 22:21].

According to Zimcodd, approval of loans without Parliament’s endorsement weighs heavily on citizens, who end up paying the debt, since loans or debts contracted are ultimately paid by the people of Zimbabwe through the Consolidated Revenue Fund.

Zimbabwe has been weighed down by debt, which has seen the country fail to get external lines of credit from institutions like the International Monetary Fund (IMF) and the World Bank.

With a total consolidated debt of US$17.5 billion, Zimbabwe owes international creditors US$14.04 billion, with domestic debt pegged at US$3.4 billion.

Debt owed to bilateral creditors is estimated at US$5.75 billion, while multilateral creditors are owed an estimated US$2.5 billion.

In February, African Development Bank president Akinumwi Adesina jetted into the country together with former Mozambican president Joachim Chissano to the Second Structured Dialogue Platform Meeting on the Arrears Clearance and Debt Resolution Process, aimed at mapping closure to Zimbabwe’s debt.

However, Zimcodd believes strengthening parliamentary oversight is important in avoiding unsustainable debt.

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