Maravi

(NEWZIMBABWE) RBZ defaults on miners’ bonds

RBZ defaults on miners’ bonds
by Gilbert Nyambabvu
30/01/2010 00:00:00

THE Reserve Bank of Zimbabwe (RBZ) which is struggling to survive, weighed down by liabilities incurred during the years when it freely printed money, has defaulted on millions of US dollars worth of bond repayments to the country’s gold miners.
A statement issued by the apex bank on Friday said all bonds would now be rolled-over for a further 6 months pending the outcome of ongoing engagements with the country’s treasury over “the Zimbabwean Government's RBZ-held debt”.

The RBZ’s troubles threaten to compromise recovery of the country’s mining sector with one firm, Caledonia Mining Corporation which owns Gwanda’s Blanket Mine saying it has been forced to put-off planned expansion projects after failing to get its money from the central bank.

RBZ Governor, Gideon Gono announced during a monetary policy presentation in January 2009 that outstanding arrears to gold miners would be turned into bonds expected to mature within twelve months.

“In order to contribute positively towards economic recovery of the gold sector, all outstanding amounts to (gold miners) have been converted into special Tradable Gold-backed Foreign exchange Bonds,” Dr Gono announced in January last year.

The bonds had a tenor of 12 months and attracted an interest rate of 8 percent.
However, Caledonia Mining Corporation published a statement on Friday saying the RBZ had failed to redeem bonds issued to its Zimbabwe subsidiary, Blanket Mine.

“Blanket Mine will not receive payment in respect of the Special Tradable Gold-backed Foreign Exchange Bonds issued by the Reserve Bank of Zimbabwe and which fall due for redemption on 1 February 2010 at a value of US$3 181,019 including interest accrued thereon of US$235 631.

“The Bonds were issued to Blanket in 2008 by the RBZ as consideration for gold delivered to a subsidiary of the RBZ in terms of the prevailing legislation,” the Canada-based Caledonia said in a statement.

The RBZ statement announcing the bonds had been rolled-over for a further six months adding that "various other initiatives are being pursued to meet all outstanding obligations” appeared to have been issued in response to Caledonia’s revelations.

Meanwhile, the central bank, which has also been taken to the High Court after failing to pay US$2 million for tractors acquired during its many quasi-fiscal operations, blames treasury for its troubles, claiming the Ministry of Finance is stalling on a much needed recapitalisation of its operations.

However treasury officials counter that they too have little room to manoeuvre as internal revenue generation remains constrained by an economy still recovering from years of negative growth while international support has not matched anticipated levels.

The RBZ’s fortunes changed dramatically when the country opted to use multiple foreign currencies in place of the virtually worth-less Zimbabwe dollar, a development that effectively put-paid-to the central bank's practice of simply printing money to fund its much-maligned quasi-fiscal operations.

Labels: BONDS, GIDEON GONO, RBZ

posted by MrK @ 8:17 AM