Political parties cross swords on takeover of central bank debt by the state

HARARE, – Lawmakers from Zimbabwe’s two main political parties in the, the ruling ZANU PF and the opposition Movement for Democratic Change (MDC) on Tuesday crossed swords over the proposed assumption of the central bank’s $1 billion debt by government.

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Government is driving the Reserve Bank of Zimbabwe Debt Assumption Bill, which will enable it to take over the debt accumulated through the central bank’s quasi-fiscal activities at the height of Zimbabwe’s hyperinflation period between 2006 and 2008.

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Part of the debt was accumulated by raiding individual and corporate foreign currency accounts held in the country’s banks. The central bank, which was effectively running the country’s budget, says it used the cash to fund government operations, including fuel and power imports as well as the purchase of farm implements doled out to newly resettled farmers.

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Debating the motion of the proposed bill, ZANU PF parliamentarians argued for assumption of the debt by government while the opposition called for an audit of the debt, naming and shaming of individuals who benefitted from the schemes and failed to pay back.

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Joseph Chinotimba (ZANU PF) said there was no need to debate the motion as there “is no difference between government and the Reserve Bank.”

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“The RBZ is an arm of government,” Chinotimba said. “It is the role of government to bail out people when they are in need.”

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Another ZANU PF legislator, Ronald Muderedzwa said it was critical for the nation to understand the circumstances under which the debt was contracted.

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“As a nation, we were in a very difficult position. The Zimbabwean government was in a war situation and had to operate outside the box. In a war there is no formula, no book economics,” he said.

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Former finance minister and ZANU PF legislator Chris Kuruneri said the RBZ tried debt financing at the time as it sought to rescue the economy.

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“I do not think the Reserve Bank did what it did because it wanted to fail,” he said, adding he however supported calls for an audit of the debt.

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Other ZANU PF legislators proposed that the governor at the time, Gideon Gono be given a medal for his unorthodox efforts to rescue Zimbabwe’s beleaguered economy.

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Opposition legislators were, however, adamant that the people who benefitted from the RBZ schemes had to pay back the money instead of burdening the taxpayer.

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They argued that a government takeover of the debt was tantamount to endorsing looting and unaccountability.

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Amos Chibaya (MDC) said it was necessary that the central bank makes public a list of those who benefited from its activities.

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“It is taxpayers’ money that is going to be used to pay so we need to be clear of what is being paid for,” said Chibaya.

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Another MDC parliamentarian, Settlement Chikwinya, said it was critical that Parliament and government promote accountability.

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“By taking over the debt, we are sanitising looting and the burden is going to be carried by the taxpayer,” he said.

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“There must be a roll of shame for those who benefitted and do not want to pay back.”

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Thabita Khumalo, who is also an opposition MP, said government must instead be working to compensate pensioners and ordinary Zimbabweans whose savings where wiped away when Zimbabwe adopted multi-currencies in 2009 instead of assuming the RBZ debt.

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Debate on the matter will continue before a decision on whether or not to pass the Bill is carried.

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ZANU PF has 234 seats in both the House of Assembly and Senate to the opposition’s 91.