The Parliamentary Portfolio Committee on Finance and Economic Development held four public hearings in Mutare, Bulawayo, Gweru and Harare from September 15 to 18 on the Reserve Bank of Zimbabwe (Debt Assumption) Bill.
Financial Sector Spotlight with Omen Muza
Media reports have revealed a deep sense of public consternation, mistrust and outrage about intentions by government to take over the debt before certain processes are carried out. This article outlines some of the issues that have emerged during this consultative process.
lIt is imperative to clean up the RBZ’s balance sheet and give it a new lease of life that will enable it to play a meaningful role in sustaining financial sector stability through lender of last resort functionality and enhanced ability to mobilise new funding.
Whatever the justification, it still appears unfair to dump the debt on (is it suspecting or unsuspecting?) taxpayers that are already overburdened by a tax regime that — for the ordinary man — has clearly become more punitive than developmental.
lGiven the foregoing, a pre-condition for debt assumption should be a thorough audit with the aim of establishing who borrowed what, when and for what purpose. Debts incurred in pursuit of genuine Government programmes must be clearly distinguished from debts which were essentially contracted under the guise of such public programmes, but ended up benefiting only a select group of individuals.
lBeneficiaries of the RBZ’s erstwhile quasi-fiscal activities under the mechanisation programme for instance should pay for the equipment they received since it was clearly intended for productive purposes. Alternatively, if they cannot pay for it — which suggests that they probably don’t deserve it — the equipment should be repossessed and auctioned to recover some of the money.
These people can’t be let off the hook because it sets a bad precedent. Condoning a culture of impunity or delinquency on the part of government’s creditors cannot be good for a government whose sources of finance are clearly limited.
Besides, a pro-people government cannot afford to allow its fiscal processes to be used as a conduit for mass transfer of wealth from the poor to the rich.
lEqual protection (in the form immunity from legal action by aggrieved creditors) must be afforded to both the Reserve Bank of Zimbabwe and the hapless banks which in 2007 were commandeered to hand over corporate FCA balances by the former.
Banks shouldn’t have to face the music on their own while the RBZ revels under a contrived halo of legal immunity. Why should Standard Chartered Bank for instance — which in 2013 was compelled by the Supreme Court to repay $48 000 to China Shougang International — have to bear the responsibility for reimbursement on its own yet the benefit accrued to government and its agent the Reserve Bank?
lGovernment, through its legal instruments, must be sincere and transparent about the payment processes attendant to the process of liquidating debts accrued by the Reserve Bank. Issuing TBs for instance should not absolve them from responsibility for the payment processes.
Payment streams should therefore be time-bound and predictable in order to instill confidence in the affected creditors, which will in turn improve public confidence in banking sector circles.
lWhile the process of debt takeover must be characterised by high levels of transparency, accountability is a key component as well. When the RBZ was contracting all this debt, it surely was aware that at some point, the debt would need to be repaid hence the need for some sort of plan. It is only fair for the tax-paying public to be advised of such plans now and why they couldn’t be implemented as envisaged; unless such plans never existed in the first place, which would be quite scandalous.
While the public hearings are a legal requirement in terms of the Constitution of Zimbabwe, one hopes that the Portfolio Committee was not just going through the motions.
The people have spoken and if the Parliamentary Portfolio Committee has any sense of responsibility and was conducting the public hearings for the right reasons and in good faith, then we expect the emphatic public voice to be duly taken into consideration and that this will be adequately reflected in the committee’s report to be tabled in the National Assembly.
If the Parliamentary Committee misses the opportunity to demonstrate that they were genuinely seeking public input and not just going through the motions in order to satisfy a legal requirement, public support for and participation in any future hearings conducted by this or any other parliamentary portfolio committee will not be guaranteed. One also hopes that the lawmakers, who are the people’s representatives, will be guided by the vox populi as they engage in robust debate leading to a substantive decision on the fate of the
$1,1 billion debt.
Feedback: firstname.lastname@example.org. Omen N Muza writes in his personal capacity. You can view his LinkedIn profile at zw.linkedin.com/pub/omen-n-muza/30/641/3b8