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Zimbabwean Government Drafts Legislation for Financial Overhaul of Central Bank

The independent daily Newsday reported that the RBZ Debt Reconstruction Bill could be passed by the end of the month, though other sources said that because Parliament has adjourned until late July the bill might not pass until August

The Zimbabwean government is preparing legislation to relieve the insolvent Reserve Bank of Zimbabwe, currently under siege by creditors, through a restructuring of its debts which total close to US$1 billion.

The independent daily Newsday reported that the RBZ Debt Reconstruction Bill could be passed by the end of the month. Other sources said the law might not pass until August as Parliament has adjourned until late July.

Meanwhile, creditors continued to press the central bank for payment of debts. The Commercial Farmers Union and non-governmental organizations whose accounts the central bank looted of hard currency before the formation of the current national unity government in early 2009 are moving to seek court orders for reimbursement.

CFU Chief Executive Officer Hendrik Olivier said his organization has asked members to detail what they are owed.

But even creditors who have reached the stage of seizing RBZ assets are not coming up with much from auctions of bank property. Davison Kanokanga, an attorney for Farmtech Spares and Implements, said such court-ordered auctions have yielded just US$500,000 to settle creditor claims totaling well over US$2.1 million.

Kanokanga said he was not sure if the proposed debt reconstruction law would deter Farmtech from seizing more RBZ property to meet its claims, remarking that "we may not be affected by that kind of law."

The RBZ ordered 150 tractors from Farmtech for a farm mechanization program and received 60 for which it failed to make payment. That program was typical of the so-called quasi-fiscal activities that drove it into debt and led it to print money indiscriminately, fueling hyperinflation which in late 2008 ran at near-historic rates.

Masimba Kuchera of the Zimbabwe Coalition on Debt and Development said that even if a new law is passed to protect the RBZ from creditors, this may not save it from further litigation.

The Sheriff’s Office has attached central bank property including 52 vehicles, three tanker trucks, refrigerators, beds, washing machines, television sets, agricultural equipment and real estate in Harare, the Manicaland province capital of Mutare and the northwestern resort town of Kariba. Most of the property has been auctioned.