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Zimbabwe Government to Assume US$1.3 Billion of Central Bank Liabilities

The central bank piled up the huge debt financing the operations of the previous government, and through its unauthorized use of hard currency funds of private companies and non-governmental organizations to meet state expenses

The new board of the Reserve Bank of Zimbabwe has resolved that the government should take over non-core assets of the institution and liabilities amounting to some US$1.3 billion, RBZ sources said Tuesday.

Finance Minister Tendai Biti is expected to draft legislation for this purpose to be tabled in Parliament.

The central bank piled up the debt financing the operations of the previous government. Other debts were incurred by the unauthorized use of hard currency deposits of private companies and non-governmental organizations to meet state expenses, though these liabilities are not expected to be handed off to the Finance Ministry.

But the sources added that the RBZ board also resolved that the central bank should be firmly in charge of its core assets and remaining debts. They said the board has set up a special committee charged with with identifying the bank’s assets that can go on the block with proceeds to be used to pay creditors.

“While the debts amounting to US$1.3 billion will be taken over by the government, we expect the RBZ to also pay other creditors like non-governmental organizations and private companies whose accounts were raided by the central bank between 2003 and 2008,” said one of the sources.

Economic commentator Rejoice Ngwenya told VOA Studio 7 reporter Gibbs Dube that taxpayers will wind up settling the debts of the former government run by the ZANU-PF party of President Robert Mugabe. In February 2009 that government was replaced by a unity government including the Movement for Democratic Change.

Elsewhere, businesses have started submitting applications to Zimbabwe's Interfin Bank seeking loans under a US$70 million facility funded by the government and the Africa Export and Import Bank.

National Chamber of Commerce President Trust Chikohora said business people are particularly attracted by the interest rate under 10 percent. Applicants must submit detailed business profiles to qualify for loans under the Finance Ministry’s Zimbabwe Economic and Trade Revival Fund.

The facility is designed to boost production in smaller firms by financing equipment and raw materials purchases.

Chikohora said the credit line will boost Zimbabwe’s production base. “Most businesses are excited that they will now access cheap loans instead of those currently attracting interest rates of more than 20 percent,” he said.

Matabeleland Chamber of Industries President Ruth Labode said the facility should benefit most businesses in the country and not just those based in Harare, the capital and main business center.