Rumbidzayi Zinyuke Business Reporter
Government will address the issue of funds taken from various companies’ Foreign Currency Accounts by the Reserve Bank of Zimbabwe at the height of the country’s economic challenges in the 2014 National Budget, Finance Minister Patrick Chinamasa said yesterday.
Speaking at an interactive session with policy makers in Harare yesterday, Minister Chinamasa said these debts and other fiscal debts were now the responsibility of Government and would be addressed adequately.
“All fiscal and quasi-fiscal debts that were accrued by the RBZ have to be cleared, that includes all the money that was taken from the FCAs. Treasury will assume legal responsibility for all those debts so that we can restore confidence in the financial services sector. We need to restore the RBZ’s mandate as a central bank and lender of last resort,” he said.
According to the RBZ, the money was taken to fund critical national obligations at a time the economy was haemorrhaging due to the effects of illegal Western sanctions.
The decision to address the issue comes at a time when the Supreme Court recently awarded a judgment in favour of a Chinese firm, China Shougang International, which was suing Standard Chartered Bank over US$47 739 taken by the RBZ from its FCA.
Central bank officials and those from Standard Chartered Bank will also appear at the High Court, accused of misappropriating an estimated US$500 000 from the Zimbabwe Aids Network which was transferred to the RBZ in 2008. The High Court in June also ordered the central bank to return over US$1 million to Trojan Nickel Mine firm, whose funds were taken through its BancABC account.
Minister Chinamasa said paying off the foreign currency debt was one of the measures that Government was taking to make sure that the economy takes off. He said his ministry was in the process of engaging creditors to verify what the country’s actual debt is and find ways to deal with it.
“In the past we would avoid creditors but now we are engaging them openly and we have told them that while Zimbabwe has no capacity to service those debts, we need new money to help us broaden our tax base and be able to start servicing the debts,” he said.
He said the biggest challenge the country faced was lack of self-confidence which was preventing foreign investors from making a commitment in the country.
He said Zimbabweans were speaking negatively about the country instead of working towards rebuilding the country’s image.
“How do we expect investment if we are speaking badly about the country to possible investors? It is important that we address the issue of country risk which is determined by what we say about ourselves to other people. It can determine investor perception,” he said.
He said the reason why most loans got to the borrower at high rates was because multilateral financial institutions always added 6-7 percent country risk on the loans they gave to local institutions who also had to add their interest.
This, he said, resulted in local people accessing money at 15-30 percent interest. Minister Chinamasa said he would take business people and bankers on most of his ministry’s trips to other countries so that they could forge relationships with investors in those countries and make way for Public Private Partnerships.
He said Government would engage partners for most big projects which needed intensive funding and encouraged the private sector to link up with foreign investors and take up big projects that would be put up for bidding
“Every good project, be it in energy, roads, railways, will be put to PPPs as long as there is a taker and we agree on the terms of the partnerships,” he said.