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NewsDay

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Treasury assumes RBZ debt, Chinamasa meets IMF team

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ZIMBABWE’s forthcoming budget will propose measures to retire debt accrued by the Reserve Bank of Zimbabwe at the height of the country’s economic meltdown

ZIMBABWE’s forthcoming budget will propose measures to retire debt accrued by the Reserve Bank of Zimbabwe at the height of the country’s economic meltdown as business activity slows down.

Victoria Mtomba

Finance minister Patrick Chinamasa was also expected to meet a team of International Monetary Fund (IMF) officials in Harare in a bid to re-engage the multilateral lender after the country failed to adhere to benchmarks of a debt settling programme.

Addressing delegates at the AMH Conversations held in the capital yesterday, Chinamasa said the country will engage the creditors with the view to addressing the debt issues in the economy.

Zimbabwe, which is saddled with a $10,7 billion external debt, adopted an IMF-staff monitored programme (SMP) to retire the country’s debt. The central bank accrued a huge debt (estimated at $1 billion) when it embarked on quasi-fiscal activities which were often financed from individual and corporate foreign currency accounts.

“We need to confront the past, Treasury has to assume legal responsibility of quasi-fiscal activities and in the forthcoming budget, we need to do it. Each time you meet them they are crying and their cries seem to reach heaven,” he said.

The SMP is a monitored programme by IMF on the country’s economic reforms and policies which facilitates debt clearance with creditors. Zimbabwe adopted the programme in May this year.

“They are coming here next week between November 6-19 to engage us. We will fail the test because we have not done the amendments on the policy front. I agree with the benchmarks, but if they are not going to give us any new money there will not be any growth,” he said.

“We need money to broaden our tax base. We told them give us new money to build capacity so that we can payback. Zimbabwe has lots of potential and what we went through is unique in our history. We went through that not because of mismanagement of our economy, but because we decided to take back our resources and for that reason we should not be taken like any other country.”

He said government will engage the creditors that include African Development Bank, International Monetary fund, World Bank, Chinese and others “We are not going to play hide and seek with creditors, we will engage the creditors,” he said.

Chinamasa said the country indicated to the multilateral institutions that they do not have the capacity to repay the principal debt.

“We told them we have no capacity to pay the principal debt amount. We have accumulated debt over $1 billion and they nodded in agreement,”he said.

“The SMP is something we all agree on. We agreed to amend the Minerals Act on a work-it-or-lose-it principle as most of the claims are lying idle. This is six years after that policy has been proposed and we have not done so yet.”

The SMP among other issues proposes a cut on recurrent expenditure and measures which promote growth of the capital-intensive mining sector Turning to the financial services sector, Chinamasa said Treasury was pushing for the recapitalisation of the central bank to restore its role as lender of last resort.