Biti wants to change RBZ


Finance Minister, Tendai Biti, says his ministry will accelerate the restructuring of the Reserve Bank of Zimbabwe (RBZ)’s delinquent debts by seeking to extend the period of repayment to forestall bankruptcy and protect its assets from appropriation by creditors.
His plans are to have the RBZ Debt Restructuring Bill through which the distressed institution would renegotiate its debts with creditors, by the end of this month and table it before parliament soon afterwards.
“We need a statutory instrument to protect the assets of the bank,” Biti said. “We should have a draft Bill by the end of the month.”
Central bank debts are estimated at marginally over $1 billion, owed to local and international creditors, including development finance institutions and local private companies and non-governmental organisations, most of which had their money unilaterally diverted from their bank accounts.
The treasury did not make provision for debt settlement in the 2010 national budget saying it does not have the capacity to meet those obligations, which the monetary authorities incurred during the period prior to the multiple-currency regime.
The default has caused substantial damage to local companies hamstrung by an enduring crisis of working capital. Some creditors have impaired the debts, while others have either sued or engaged debt collectors to recover their dues, resulting in the attachment of vehicles, furniture and other assets belonging to the bank.
The $10 million allocated from the current budget is hardly enough to support central bank operations or to cover cumulative arrears on operating expenses brought forward from the previous year when the bank received no fiscal support.
Biti’s Ministry is working closely with the monetary authorities to reduce their obligations and allow the bank to proceed with its conventional operations.
The RBZ board has already appointed a sub-committee to look into the technical aspects of RBZ debt repayment plan and another to handle the disposal of quasi-fiscal assets to raise money to finance the debt management program.
The debt will be restructured by rolling over current obligations through the market offering of securities such as bonds, which would be issued to every one of the central bank creditors as payment. The bonds will be low-interest-bearing with a fixed coupon rate and a medium to long-term life of 12 months or more. Market sentiment holds that the securities are likely to be sold at a discount or at face value.
The success of the open market operation depends on the cooperation of the central bank’s creditors, given that the bank failed to redeem the one-year gold bonds it issued to miners of the precious metal when they fell due on February 1 this year.
Until now, the central bank is yet to come up with more viable repayment plan apart from a mere promise to pay.
It issued the bonds last year to buy time, while it spruces up its indelible financial mess.