BULAWAYO City Council (BCC) is technically insolvent, with town clerk Christopher Dube attributing the situation to the country’s unforgiving harsh economic climate.
BY NQOBANI NDLOVU
This comes after Bulawayo mayor Solomon Mguni warned that council would have no choice, but to further increase rates to hedge against the rising cost of services and goods.
Mguni also warned that BCC would be forced to introduce a supplementary budget to ensure efficient services, arguing galloping inflation had already eroded the yet to the approved 2019 budget.
Dube said the local authority now had more creditors than debtors.
“We are technically insolvent. We now have more creditors than debtors. That is the situation we are in right now as the local authority. I do not have figures off-hand, but the last time I checked, we owe our creditors over $200 million against $188 million we are owed by debtors,” Dube said yesterday.
Government has maintained a 1:1 exchange rate parity between the local bond note and the United States dollar, but a fall in value of the former has triggered a jump in prices of goods and services, and Dube said the local authority had not been spared.
As a stop-gap measure to raise the much-needed capital, BCC has already started implementing a 50% debt cancellation policy targeting those settling outstanding debts in foreign currency.
The council is also selling housing stands in forex.
Dube said the BCC maintains the government 1:1 rate when dealing with the United States dollar and the bond note, EcoCash or real time gross settlement (RTGS) so as not to fault the government on the exchange rate.
Analysts have said government must re-dollarise the economy to deal with the unfolding currency crisis.
“Given what is happening in our economy, I think the administration needs to accept re-dollarisation and avoid a series of ligations over bond/RTGS balances that may lose their value. I think they must issue Treasury Bills (TB’s) or some other kind of mechanism,” commentator Liberty Bhebhe argued.
“These TBs or whatever facility should mature over different time periods. In order to protect ordinary citizens, TBs should be for balances over 10 000 for individual accounts and on a sliding scale for business. This will protect RTGS bank balances and ordinary people’s savings.”