‘No return of Zim$’ – Chinamasa

HARARE – Finance minister Patrick Chinamasa on Monday ruled out the return of the Zimbabwe dollar despite the introduction of bond coins to mitigate change-related challenges and offer competitive pricing for goods.

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Finance Minister Patrick Chinamasa

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Appearing before the parliamentary committee on Finance and Budget in the capital, Chinamasa said a local currency would only be introduced after the demonetisation of the old currency, a process yet to be kick-started.

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Chinamasa’s assurance came barely a week after the Reserve Bank governor John Mangudya told editors from both the public and private media that the Zimbabwe currency would not return in the “foreseeable future”, hinting that it might even take over 20 years for it to resurface.

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“We will not introduce any new currency in the near future until we have first demonetised the Zim dollar. We are pursuing it, but once again, Cde chair, it’s not a simple and straight forward matter,” said Chinamasa while debating the Central Bank Debt Assumption Bill which is now before the National Assembly for approval.

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The minister, who was accompanied by Mangudya, said for the state to have its local currency, it must first build confidence in the banking sector and the economy at large

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Mangudya pleaded with lawmakers to encourage the use of bond coins, saying the coins encourage competitiveness in the economy as they offer a realistic pricing regime and not short-change consumers.

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“I believe, as MPs, you are more accessed by the people, may you help us explain the bond coins to the people, and it is one decision that I am prepared to defend. I am advocating that prices go down and then our economy can expand, hence the introductions of bond coins,” Mangudya said.

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“Let us take an example, if people were to sell their cabbages at 50 cents than selling at $1 for two, this will give the consumer more spending power to buy milk (and other products), and the economy grows.”

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Addressing editors last week, Mangudya said: “The United States dollar will be here in the foreseeable future… It will be here, in my view, for more than 20 years before the Zimbabwe dollar returns.”

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Zimbabwe joined Ecuador, East Timor, El Salvador, Marshall Islands, Micronesia, Palau, Turks and Caicos, British Virgin Islands in the use of US currency.

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The US currency is the most widely used denomination in the world, with many countries adopting it as an accepted alternative to their own currency

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Mangudya said mining, tourism and the agricultural sectors were the three pillars key to Zimbabwe’s economic growth, going forward.

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Zimbabwe recently introduced bond coins as a way of providing change to the transacting public,  but there has been a slow uptake, which Chinamasa and the governor said was being caused by perception challenges.

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About $2,5 million bond coins are in circulation after their introduction almost a month ago. Big corporates have accepted the coins.

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“This economy has been destroyed by perception and it is our duty, and you as part of government, to assist in destroying that,” Mangudya said.

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Bikita West MP Munyaradzi Kereke told the central bank czar that he should restore confidence in Zimbabweans, if he wants to win the war of bond coins.

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Meanwhile, parliament has instructed the central bank to revisit the amounts owed to various institutions by the bank before the law making house approves the takeover of its debt by government, amid fears of fraud and inflation of figures.

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Chinamasa was tasked to revisit the amount supposedly owed by the central bank which government wants to take over under the RBZ Debt Assumption Bill.

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Kereke, who is an ex-senior official of the central bank, said the debt statistics availed to parliament had been inflated and in some instances, “chances of fraud” might have been committed.

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“For parliament to satisfy itself that this bill will achieve the intended objectives …the following, what I would call for now, serious glaring areas of oversight, should be addressed,” Kereke said.

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“Let us look at the FBC-Afreximbank, the loan amount is shown as $1,7 million, in other words we owe $1,7m as at December 2008, the suggestion from the schedule is that parliament approves that loan as having grown to $43m, that is a serious oversight which cannot be allowed because it’s an over statement of $40m and parliament cannot be expected to approve the bill in its current form.”

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The central bank has tabled a bill through the ministry of Finance before parliament for approval to have the $1,3 billion debt it incurred while carrying out quasi-fiscal operations on behalf of the state in 2008 be taken over and paid by ordinary citizens.

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During the hyper-inflationary era, the central bank undertook quasi-fiscal duties which included election related mandates, paying of civil servants salaries and funding of state functions by borrowing money from various institutions.

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It has, however, battled to pay the debts, resulting in government proposing to take over the bill.

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Kereke said besides the FBC-Afreximbank amount which was inflated, the amount owed to ASP Marketing, a South African registered company, had been inflated by more than $20m, up from $25,8m to $41,2m at an interest rate of 3% per annum over eight years.

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“There is serious error of oversight which needs to be corrected before if parliament is to approve. There are issues to be corrected which are so glaring for us to be called parliament we have discharged our oversight role (sic),” he said.

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The ex-advisor of the central bank then boss, Gideon Gono, claimed there were high chances that fraud could have been committed to the Meikles debt which he said, even before the verification exercise was complete, government had already issued out treasury bills in settling the debt, a development which exposes the state to fraudlent activities.

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“There is an item honourable minister where I want to make the following observation, that there is a possibility of fraud in respect of Meikles debt. I use that language because Meikles has gone officially  on the stock exchange and submitted reports that are public because its publicly listed, suggesting that it is going to receive and in fact, it has received over $50m already, $90m from the RBZ. Honourable minister, this is an incorrect figure,” he said.

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“Meikles Africa deposited $25m and it’s correctly captured by the treasury, the schedule recognises that this amount has grown to $40m. We want perhaps the governor to explain to the committee what the correct figure is in relation to the Meikles debt,” Kereke said.

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Kereke said the audited figure for the Meikles debt should be $34,1m as at December 2008.

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In his response, Chinamasa said he was going to institute a probe into the Meikles figure so that no one is prejudiced.

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“It is important that Cde chair as we approach these matters, we are fair to those who were owed these monies and some of them went under. Some of them were actually being threatened and even the big companies you mentioned, for instance,  Meikles, had problems with their shareholders on the London Stock Exchange because the money that was taken over by the reserve bank was never intended to be onto the central bank,” Chinamasa said.

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“ It was intended by their shareholders to be invested in Africa and because of the circumstances that obtained at the time, the money ended up being in the pockets of banks in accordance with  the situation that was prevailing at the time.

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“But I am not opposed to an audit to see if there was anything wrong, and any act of fraud committed. Even if we paid them through treasury bills, we will not honour them if there is anything wrong done in coming up with the figure.”

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But Kereke could not be moved by the response, saying the audit must be done quickly to avoid the defrauding of public resources.

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“This Meikles case must be referred to the stock exchange and the Securities Commission. As parliament, we cannot be seen approving such glaring anomalies, where there is a possibility of fraud,” Kereke said.