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(SUNDAY MAIL ZW) Gono breathes fire over debt

Gono breathes fire over debt
Saturday, 05 November 2011 23:44
By Munyaradzi Huni

THE Reserve Bank of Zimbabwe took over a debt amounting to about US$400 million that was incurred well before the central bank boss, Dr Gideon Gono, took office, and the apex bank can pay off all its debts amounting to about US$1,1 billion if the Government reimburses the US$1,4 billion that it authorised the RBZ to pay out during critical times.

Even the IMF Monetary and Capital Markets Department Report prepared by Mr Kenneth Sullivan in May 2011 confirms the figures on Page 26 under Appendix II and III where it gives a detailed breakdown of the RBZ debts.

In a statement released exclusively to The Sunday Mail, Dr Gono said the facts behind the RBZ debt profile have been distorted so much that it now seemed as if “my management team spent US$1,1 billion either buying tractors and scotchcarts or simply went on a debt-contracting spree and blew away the money in support of non-existent programmes or, at worst, the whole amount is a Gono debt which he must find a way to pay”.

Dr Gono said when he took office on December 1 2003, the country was facing challenges in foreign currency availability to meet Government requirements and so it became imperative that over and above the erratic export-surrender levels, additional foreign currency had to be mobilised from various sources.

He said to succeed in the resource mobilisation exercise and in the interest of good corporate governance, the 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 Governor indicated that on June 4 2004, on July 6 2005, on July 18 2006, on September 14 2007 and on August 18 2008 he got letters from the Ministry of Finance written by the permanent secre-tary, Mr Willard Manungo, authorising the central bank to borrow a total of about US$1,1 billion.

"It is also recommended that without any further delays, the Minister of Finance be advised to acknowledge and take over these Government debts from RBZ books and work out amicable re-payment plans with creditors," said Dr Gono.

He said some of the debts he inherited included a US$10 million loan from the South African Reserve Bank that was contracted and rolled over since 1979, a US$49,8 million loan from Bank Negara - Malaysian Central Bank - that was contracted from June 1991 to September 2000, US$55,1 million owed to regional and continental banks and corporates that contracted prior to 2003 and US$295,2 million owed to local financial institutions that was contracted between 1996 and 2003.

"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," said Dr Gono.

The Governor showed that indeed he was forced to come up with extraordinary solutions in mobilising foreign currency as one letter from the US Department of Justice written on May 11 2007 gave the central bank about four days to pay a debt of about US$5 million that was contracted between 1996 and 1997. After the RBZ managed to raise the US$5 million and beat the deadline that was given, about nine days later, the

US Department of Justice wrote yet another letter, demanding that the central bank should pay a debt of US$39 716 656 that was contracted in 1997 in less than two weeks. Dr Gono said "the vultures were hovering over the country and they were threatening to take all sorts of actions, including impounding our planes.

Fortunately I managed to raise the required amount.
"Unfortunately, today some people want to make it appear as if all the money went into Gono's pockets."

Labels: GIDEON GONO, RBZ

posted by MrK @ 4:40 PM