The opposition Movement for Democratic Change says it is seriously considering filing a case in the constitutional court to challenge the Reserve Bank of Zimbabwe Debt Assumption Bill, which was passed by the house of assembly yesterday.
The cash-strapped government is to assume the $1,3 billion debt accrued under the stewardship of former central bank chief, Gideon Gono.
Former RBZ governor Gono has defended his quasi fiscal operations as necessary at the time to help bust punitive economic sanctions imposed on Harare by the west.
Gono says the quasi fiscal operations saved the country’s infrastructural networks from “total collapse due to inadequacy of traditional fiscal revenue streams.”
The central bank undertook quasi-fiscal projects and introduced programmes such as the productive sector facility, Basic Commodity Supply Side Intervention (BACOSSI), Local Authorities Reorientation Programme (LARP), the farm mechanisation programme and the agricultural support enhancement facility.
Many of the operations were allegedly abused by corrupt individuals and public officials within and outside the central bank for personal gain.
Some of them voted Tuesday for the government to assume the debts accrued from these activities.
IMF AND CASINO ECONOMY
The International Monetary Fund condemned the operation though Gono stuck to his guns in his book: The Casino Economy. He coined the term ‘casino economy’ in 2008, to describe the rife speculative activities taking place in Zimbabwe that were akin to gambling, during the era of hyperinflation.
Taxpayers are expected to bear the burden of settling debts during his term as RBZ chief. The RBZ Debt Assumption Bill passed in parliament proposes that the government should take over the ban’s $1.35 billion debt.
CONSTITUTIONAL COURT CHALLENGE
But the opposition MDC Member of Parliament, Eddie Cross, says the party will appeal to the constitutional court to challenge the bill.
But prominent lawyer and Zanu-PF lawmaker Jonathan Samkange says parliament is supreme and cannot be challenged in such matters.
Constitutional law expert Lovemore Madhuku, who is also the leader of the opposition National Constitutional Assembly party says chances of the MDC’s challenge succeeding are slim.
Economic analyst Chris Mugaga of the think tank, Econometer Global Capital, says the bill makes economic sense as it is a burden to the central bank.
But chairman of the Zimbabwe Coalition on Debt and Development, Joy Mabenge, says assuming the debt will burden the tax payer.
Zimbabwe’s total debt, which is seen as blocking new funding for its stuttering economy, stands at an estimated $10 billion or 54 percent of Gross Domestic Product after verification with the external debt accounting for 90 percent of the figure.