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Govt. Takeover of RBZ Liabilities to Push Zimbabwe's External Debt to $7 Billion

Finance Minister Patrick Chinamasa

Finance Minister, Patrick Chinamasa, says government’s takeover of the $1.35 billion Reserve Bank of Zimbabwe debt will push the country’s external debt to almost $7 billion.

According to Chinamasa, the country's debt will also soar to more than $1 billion from just below $500 million.

Chinamasa told lawmakers during the second reading of the Reserve Bank Debt Assumption Bill that the central bank’s external debt which currently stands at $596 million will push the country’s external debt to almost $7 billion if parliament passes the bill authorizing government to take over the RBZ debt.

He said the central bank debt would be subject to validation and reconciliation to establish the extent of the bank’s liability.

Chinamasa said the treasury is already validating the debt through its debt management office.

He said the debt would be liquidated through various ways such as issuance of treasury bills.

The central bank debt accrued through quasi-fiscal activities, which includes among other things the procurement of farming equipment that was distributed freely to mostly Zanu PF supporters, and purchasing of vehicles for lawmakers and some government departments.

The debt assumption bill if passed into law, would authorize government to take over RBZ debt accrued prior to December 31st, 2008.

Economist Nyasha Muchichwa says government is already in a debt trap and does not need to assume the RBZ debt given that those who got equipment from the bank had not repaid their loans.

He said he is surprised government is taking over the RBZ debt when it cannot manage to pay interest on its huge debt.

Meanwhile, a French business delegation led by Gerard Wolf, vice chairman of the Africa Committee of the MEDEF International, is in Zimbabwe for three days to assess investment opportunities in the country.

Wolf told journalists in Harare that French companies are well aware of Zimbabwe’s economic potential and investment opportunities.

He noted that Zimbabwe offers a good environment for international investors.

Ten companies are part of the business delegation with interest in sectors such as infrastructure, transport and logistics.

British and Danish investment groups visited the country last year but it still remains to be seen whether they will invest in the southern African nation with a feared indigenization law, which compels foreign-owned firms to transfer majority equity stakes to local people.

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