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(NEWZIMBABWE) Gono: I didn’t spend US$1.1bln on scotch-carts

Gono: I didn’t spend US$1.1bln on scotch-carts
05/11/2011 00:00:00
by Gilbert Nyambabvu

RESERVE Bank of Zimbabwe chief Gideon Gono has angrily rebutted widespread criticism of his stewardship of the central bank which now teeters on the brink of collapse, weighed down by debts of up to US$1.4 billion. The RBZ is technically insolvent with critics blaming its massive debt pile on Gono.

They accuse Gono of presiding over a spending spree after assuming office in 2003 which saw the RBZ freely printing money and engaging in so-called quasi-fiscal operations that included funding elections, acquisition of farm implements and luxury vehicles for government officials.

This, the critics add, helped stoke inflation which reached record levels of 11.2 million percent in 2008, leading to the ditching of the Zimbabwe dollar.
But the RBZ chief hit back in a statement issued to the state-owned Sunday Mail newspaper.

“The belief is that RBZ and my management team spent US$1,1 billion either buying tractors and scotch-carts (mechanisation programme) or simply went on a debt contracting spree and blew away the money in support of non-existent programmes or at the worst, the whole amount is a Gono debt which he must find a way to repay,” he said.

Gono said all the expenditure had been requested and authorised by the government through successive Finance Ministers adding the RBZ could easily liquidate its $$1.1 billion obligations if the government paid up its own debt of US$1.4 million to the institution.

[I'm sure the writer means $1.4 billion, not $1.4 million. - MrK]

“We at RBZ asked for specific letters authorising us to mobilise forex resources for government, with limits being placed by government in relation to how far and how much the Ministry of Finance wanted RBZ to mobilise on its behalf,” the statement read.

“This we insisted upon in order to avoid the kind of irrational debate we are currently having as a nation.”

Gono said the RBZ owed external and internal creditors US$1,082 billion in government authorised borrowings.

The government, however, owes the RBZ US$1.5 billion in funding extended towards supporting various state enterprises, grain imports, acquisition of farm implements, cars for ministers and other officials and funding for the 2008 elections.

“It is also recommended that without any further delays, the Hon Minister of Finance (Tendai Biti) be advised to acknowledge and take over these government debts from RBZ books and work out amicable repayment plans with creditors,” he said.

The RBZ chief appeared to be particularly incensed by criticism of his involvement in helping farms acquire implements with many of them failing to pay for them.

“In debates about RBZ debt, the discussion of RBZ debtors has only centred around Farm Mechanisation debtors who owe RBZ about US$198,0 million which is 12,4 percent of RBZ’s debtors, while ignoring 87,6 percent of the debts owed to the bank by government,” he said.

“If government was to repay RBZ US$1,4 billion that it owes the apex bank tomorrow, the bank would in turn be able to pay its US$1,1 billion debt to creditors and still remain with US$300 million for its capitalisation, lender of last resort operations, day-to-day needs and then focus on its core mandate!”

He also claimed to have inherited a debt of US$400 million when he assumed office in 2003 and added that the ditching of the Zimbabwe dollar and liberalisation measures introduced by the coalition government in 2009 further worsened the situation.

“The new economic measures introduced in March 2009 saw the sudden and abrupt abolition of any inflows of funds into the RBZ coffers by way of export surrender proportions, gold proceeds retentions as well as the use of the Zimbabwe dollar as a medium of exchange,” he said.

“This move, while intended to revive the economy and therefore most welcome, brought with it unintended consequences which are the subject of this debt debate and RBZ debt crunch.”

Labels: GIDEON GONO, RBZ

posted by MrK @ 5:22 PM