RBZ assumes US$3,8bn debt in blocked funds
THE Zimbabwe government opened the year by assuming fresh debt for 855 firms amounting to US$3,8 billion in blocked funds that the central bank failed to help repatriate externally on behalf of those companies.
e assumption of debt by the Treasury was done through Act No. 7 of 2021 that gives legal effect to the Reserve Bank of Zimbabwe (RBZ) paying off the 855 private firms whose monies are part of the blocked funds.
While the US$3,8 billion has been approved by the Treasury, it was from a total of US$6,3 billion worth of claims made by the 855 firms with the remainder still being disputed. e assumption of the debt was noted under section 52 of the Act titled “Assumption of obligations by the State”, wherein Treasury noted that:
“(1) Subject to the validation and reconciliation of the relevant claims under section 50, the minister shall, on behalf of the State, assume responsibility for the discharge of the outstanding blocked funds. (2) e terms and conditions under which the minister assumes responsibility in terms of subsection (1) for the discharge of any obligation with respect to the blocked funds shall be fixed by the minister.”
e blocked funds which the RBZ assumed were monies related to external obligations that could not be remitted between January 2016 and February 2019 on behalf of the 855 firms.
e Treasury went on to list the 855 firms in the Act under review which included fuel operators, airlines, banks, telecommunications, and even law firms which now taxpayers must pay adding to the government's existing debt.
e two largest companies by market capitalisation on the Zimbabwe Stock Exchange, namely, Delta Corporation Limited and Econet Wireless Zimbabwe are owed our investment climate.
"Shockingly, this development is in stark contradiction with the Zimbabwe is open for business mantra being peddled by the government," Chisango said.
"We shouldn't be having such cases where offshore investors are struggling to have their dividends repatriated particularly when we are in dire need of investment into the country for various development purposes. So the net effect of this is that potential investors will continue shying away from Zimbabwe as it remains a hostile investment turf, and the worst case scenario is of capital flight, where those with investments in the country might relocate to safer destinations if this is to persist."