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Harare - The Zimbabwean government is set to take over a $1.3bn debt from the country’s central bank, the Reserve Bank of Zimbabwe (RBZ).
The debt takeover comes in the wake of a vote by Zimbabwe’s parliament on Tuesday to allow government to take over the debt through the RBZ Debt Assumption Bill.
The Bill allows government to take over the central bank’s debt of over $1.3bn as a means to, among others, free up its balance sheet, allow for its recapitalisation and to enable it discharge its functions effectively.
The RBZ’s debt was accumulated mainly as a consequence of pressure from government for the central bank to undertake numerous activities generally beyond the normal functions of a central bank.
The debt assumption also comes at a time the Zimbabwean government is already saddled with a total debt amounting to $9.9bn or 54% of gross domestic product.
Finance Minister Patrick Chinamasa believes the debt overhang “is a very inhibiting factor to securing fresh money, mobilising fresh money, and fresh resources.”
Unlike most Bills, passage of the proposed takeover of the central bank debt had to be decided through a vote as the opposition MDC-T insisted that it would be unfair to have it passed through any other means.
After the Bill passed, MDC-T legislator Nelson Chamisa said Parliament had violated its own rules arguing that MPs who benefited from the RBZ quasi fiscal activities should not have been allowed to vote for the Bill.
