Millions of taxpayers’ money was reportedly used to fund the country’s 2008 harmonised elections through quasi-fiscal costs against sound economic advice of the Reserve Bank of Zimbabwe leaving the central bank faced with a crippling debt crisis of $1,1 billion, RBZ governor Gideon Gono said Tuesday.
Gono — who appeared before the Parliamentary Portfolio Committee on Budget, Finance and Investment Promotion chaired by Goromonzi North MP Paddy Zhanda — denied the debt crisis bedevilling the central bank was contracted without authority and in contravention of the Banking Act prior to 2010.
But, he said 60% of the financial mess was inherited.
Gono said: “For example, the harmonised elections were funded through quasi-fiscal costs against the advice of the central bank.
However, I have broader shoulders to say that whatever we did, we erred, (but) the problem was with the laws of the country which were coined by the MPs themselves.
“They put a clause which allowed the Minister of Finance to give directives that were to be followed and that was an oversight on the part of the Legislature. There is no single activity of the central bank that was done without authority.”
The 2008 synchronised polls later turned violent after the first round failed to produce an outright winner in the presidential election which pitted President Robert Mugabe and MDC-T leader Morgan Tsvangirai as the frontrunners.
Zanu PF Goromonzi Senator Herbert Murerwa was the Finance minister at the time of the 2008 elections.
Gono added: “They (MPs) put a clause which allowed government to be able to use the central bank for purposes government so desired and provide for the monies as per the directive of government.
“The RBZ is a creature of legislation and when such instructions were given in terms of the law, it was legally necessary for me to follow them and there also has been a misconception to believe that the $1,1 billion debt is a creation of Gono, but you may want to know that 60% of that amount was actually inherited from independence.”
He said the total debts he inherited constituted 55% of the $1,1 billion debts by the bank. Government also owed $1,5 billion to the RBZ and if government were to pay, they would also be able to pay $1,1 billion owed to the bank’s creditors.
“The $1,5 billion that government owes – if paid will leave us with $1,1 billion and will leave us even with $400 million. You cannot say this constitutes a disaster because the total debt of this country is over $8 billion and the RBZ debt is only an eighth of that,” Gono declared.
“In fact, a $225 million debt was contracted by the country in 1998, $104,8 million was contracted from external financial institutions in Africa, $190 million inherited from local institutions, and since 1980 the central bank owed $59 million to the region, as well as local corporations, farmers, miners, non-governmental organisations and individuals owed $114 million between 1993 to 1996 and this gives a total of $622,3 million.”
But, Zhanda felt Gono had been given approval to accrue that debt by the Executive and not Parliament, a wrong procedure.
The chairman of the RBZ Asset Disposal Committee, Justice George Smith, told the committee the central bank had identified 23 immovable properties in Harare, Bulawayo, Gweru, Mutare and Nyanga to be disposed of and they wanted to get a maximum value from them of not less than $120 million.
Gono said unless they got funding from the fiscus, it would be difficult for the RBZ to discharge what is expected from it.
He said the bank’s balance sheet was still burdened by quasi-fiscal activities of yesteryear.
The chairperson of the RBZ Human Resources Committee, Primrose Kurasha, said the bank retrenched 1 455 employees, which was 75% of its staff, and the problem they were facing was the money to pay the retrenchees.
“The amount that was owing since the retrenchment exercise was $17 884 304,46 and what has since been paid is $4 593 315,62 and the amount still owing is $13 290 988,84,” she said.