BY VENERANDA LANGA
Reserve Bank of Zimbabwe (RBZ) governor John Mangudya yesterday denied that the central bank was involved in any quasi-fiscal activities and called out Finance minister Mthuli Ncube and parliamentary committees for not understanding the issues involved.
Mangudya made the remarks when he appeared before a joint meeting of Public Accounts and the Finance committees to discuss the legal basis for the RBZ undertaking quasi-fiscal activities and how the amounts were used in financing fuel procurement and other commodities. He told the legislators that they, along with Ncube, do not understand the term “quasi-fiscal activities” and that they need a workshop to unpack it.
Bikita West MP Elias Musakwa (Zanu PF) asked Mangudya to explain how the RBZ acquired loans amounting to almost $1 billion and how much money was channelled to public sector investment programmes, recurrent expenditure and stimulus programmes.
“I do not think your question is relevant at this moment because those are not quasi-fiscal activities,” Mangudya said, adding that the apex bank had not carried any quasi-fiscal activities since 2014.
“Quasi-fiscal activities at the RBZ do not exist and it is important for Zimbabweans to know the truth, and what RBZ used to do when we bought tractors, generators and baccossi – those were quasi-fiscal activities and so do not confuse those with what is happening now and people should not abuse the RBZ by confusing those with what is happening now. They were taken over by the RBZ Debt Assumption Act.”
Tendai Biti (MDC Alliance), however, pressed Mangudya further by rephrasing Musakwa’s question saying: “In your Monetary Policy Statement of February, you said there were certain things that were going to carry on using the old system, and you said the bank, through the foreign currency committee will continue to supply foreign currency for fuel, wheat and 14 other products, and in our definition these fall under quasi-fiscal activities.”
Biti pointed out that the RBZ has no mandate to give money to fuel players, Zesa and others because these were essentially activities of central government; and also in terms of section 6 of the RBZ Act the bank’s functions were only to regulate the country’s monetary system, achieve and maintain the stability of the Zimbabwe dollar, and to act as banker and financial adviser to government and economic stability, among others.
But Mangudya insisted that the MPs had a wrong definition of quasi-fiscal activities.
“It is a wrong definition. Quasi-fiscal activities are activities done by the central bank and any other bank at below the market price. We need to use an international definition so that Parliament does not have its own definition. This economy is going through difficult times. There is no one in this country who can borrow funds to help Zimbabwe. So these are just foreign names. Zimbabwe is a step child in a family of nations and it is difficult to deal with a step child so that it does not have kwashiorkor and die.
“My core business is in section 49 of the RBZ Act, to ensure there is foreign currency. When I give money for fuel, it is only called a foreign allocation. I think as MPs you need a workshop with RBZ on what are quasi-fiscal activities,” Mangudya said.
Biti then asked him to explain why Ncube, in his 2019 budget statement mentioned that the RBZ was engaging in quasi-fiscal activities and was going to ensure that they are liquidated.
“I think Ncube was misinformed on that point because I asked him to give me three or one quasi-fiscal activity I was engaging in and he could not. That’s a wrong definition that the minister was using and he also needs a workshop on that. Do not use Zimbabwean language on that,” Mangudya said. Biti then ordered Mangudya to give Parliament a document detailing how much he paid in what he termed “foreign allocations” and not quasi-fiscal activities.