RBZ debt wasn't all mine, says Gono

Published: 02 December 2013

Former Reserve Bank of Zimbabwe governor Dr Gideon Gono says only 45 percent of the $1,3 billion debt weighing on the viability of the central bank was accrued during his tenure.

The former RBZ chief stepped down last Friday after 10 years at the helm with his deputies, Dr Charity Dhliwayo and Dr Kupukile Mlambo, taking over in an acting capacity on a rotational basis.

Dr Gono said he had left office a happy man after Cabinet last week endorsed the assumption of the central bank debt to allow for the recapitalisation of the bank and for the restoration of the lender of last resort.

The ex-RBZ chief said an impression had been created in the market that the entire $1,3 billion was contracted during his tenure, especially during the period 2003-2008.

He made the remarks in his farewell letter to the Bankers' Association of Zimbabwe, adding that the essence of his explanation was not to point fingers at one era of the administration of the bank

"For the record, only 45 percent of that debt was created by survival circumstances of my era, while 55 percent was rolled over years such as the IMF, World Bank, AfDB loans of the early 80s and 90s, Malaysia and South African Central Bank debts among others," Dr Gono said.

But it means just over half of the apex bank's liabilities were incurred over the two decades to 2000.

Dr Gono said some of it was incurred during "our independence era" right through to 2000.

Dr Gono has always argued all the expenditure he made in the contraction of the debt accrued during his reign had the blessing of the then Minister of Finance, Dr Herbert Murerwa.

Often, the ex-governor has cited expenditure into procurement of critical things such as fuel, drugs, medicine and agricultural equipment at the height of Zimbabwe's economic instability.

He has argued all his actions were critical to avoid the country plunging into a crisis.

But certain sections of the populace wanted the debt thoroughly audited to determine the portion legitimately accrued amid misgivings that some of the debt was contracted illegitimately.

While there never was any controversy about the inherited debt, the part contracted under Dr Gono received countless criticism with certain critics attributing the debt to the quasi-fiscal operations he undertook in various sectors of the economy and Government institutions.

Dr Gono doled out loans to struggling parastatals such as the National Railways of Zimbabwe, Zesa Holdings, Air Zimbabwe and agriculture through the ASPEF facility, generally overstepping limits of his mandate and assuming role of a de facto Minister of Finance. It was the RBZ's participation in such activities as farm mechanisation, bailing out parastatals, procuring implements for farmers, paying off debts for State enterprises and inputs acquisition for farmers that were deemed out of lines with Dr Gono's brief.

Procurement of cars supplied to Government ministries, ministers, senior officials, parliamentary and Senate committees, payment for Grain Marketing Board seed, grain and fertiliser imports, Zesa debt arrears and power importation payments, extraordinary Government support financings among some of the quasi-fiscal operations analysts deemed extra-curricular to Dr Gono's brief.

The RBZ debt was also inflated by funds annexed from foreign currency accounts of corporate and other organisations that were held at various banks in the country.

During his reign, hundreds of millions of dollars were also taken away from banks in the form of foreign currency balances.

What made the situation even complicated is the fact that the majority of those assisted with schemes that contracted debt for the RBZ failed to pay to enable the central bank to extinguish the liabilities that today has stifled the bank's ability to discharge its duties.

While the governor has always justified his actions to prevent the country from "descending into chaos" the question remains as to what extent was this justified in terms of his mandate and legal correctness where frameworks to deal with those portfolios existed.

However, Dr Gono last week said Government should be commended for finally summoning courage to clean up the RBZ books to allow for its recapitalisation and resumption of lender of last resort function.
- herald