THE Finance ministry has rejected Parliament’s proposal that it assumes the Civil Aviation Authority of Zimbabwe (CAAZ) legacy debts, saying the authority has adequate revenue streams to service its obligations.
Treasury warned that taking over such liabilities will strain the national budget and undermine funding for essential public services.
The aviation regulator is under strain, with current liabilities exceeding current assets, signalling a working capital deficiency and inability to pay short-term debts.
According to the Public Accounts Committee (PAC),operations at CAAZ are under threat after the authority failed to service overdue long-term legacy loans amounting to ZWL18,59 billion and domestic loans totalling ZWL111 million for the year ended December 31, 2020.
PAC said CAAZ faced a going concern challenge due to legacy loans that were not transferred to ACZ following the unbundling of CAAZ to a regulator (CAAZ) and an airports company (ACZ). Efforts are underway to transfer US$48 million to the government, which, if successful, will resolve the going concern issue, it said.
The committee noted with concern that the failure to transfer both assets and liabilities casts aspersions on the financial and accounting acumen of CAAZ’s accounting officers.
In its report, PAC recommended that CAAZ engage its parent ministry to get assistance in transferring the legacy loans to ACZ.
“The Ministry of Finance, Economic Development and Investment Promotion should consider taking over the legacy debts to alleviate the financial burden on CAAZ and ensure its long-term sustainability,” the committee said.
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In response, Finance minister Mthuli Ncube said Treasury did not have the fiscal capacity to absorb or directly service CAAZ’s debts. He warned that assuming such liabilities will place undue strain on the national budget and compromise funding for essential services and national development priorities.
“The principle of fiscal prudence requires that debt management remain aligned with established mechanisms rather than ad hoc transfers of liability,” Ncube said.
Treasury noted that following CAAZ’s unbundling, mechanisms were established to ensure continuity of debt servicing. CAAZ retains responsibility for charging airspace fees, while ACZ handles landing fees and passenger tax components. In addition, CAAZ receives 32% of revenue collections from landing fees and passenger taxes from ACZ.
“These arrangements provide CAAZ with sufficient revenue streams to meet its debt obligations. The unbundling process was specifically designed to prevent the transfer of liabilities to Treasury while ensuring sustainable debt servicing by both CAAZ and ACZ,” Ncube said.
