BULAWAYO South MP Eddie Cross (MDC-T) has warned that government’s continued takeover of debts of State enterprises and parastatals will see an additional $3 billion of new debt on top of the $8bn debt that is already bedevilling the country.
by VENERANDA LANGA
Cross told the National Assembly before it adjourned last week that it was imperative for Finance minister Patrick Chinamasa to always seek Parliament approval before incurring debt because this would affect future generations.
Early this year, the government took over the Reserve Bank of Zimbabwe’s debt of $1,35bn, amidst resistance by the opposition parties, who demanded to know how the debt was incurred and the beneficiaries before Zimbabweans were made to pay it back through being taxed.
“Right now, if you look at Zisco Steel, there is $500 million of debt and the minister has already announced that he is going to take that over. We understand from Industry and Commerce minister Mike Bimha that we are going to take over the Sable Chemicals debt of $150m and if we take over the CAPS Holdings debt, that is another $30m,” Cross said.
“The NetOne debt to be taken over is $350m. The Premier Service Medical Aid Society debt, where an attempt was made to put that on our shoulders, is $144m, and if you add up all these debt items, it comes to over $3bn of new debt, all incurred in 2013 with absolutely nothing to show for it.”
Cross said it was imperative to keep an eye on the debt situation by ensuring that all debts taken over by the government were approved by Parliament.
“The minister may not incur debt unless he has the approval of this House. I am worried about the issuing of Treasury Bills on a rampant basis for all sorts of things without the authority of the House,” he said.
Zimbabwe’s external debt overhang has hit $8bn and has downgraded the country’s credit rating, which enables a country to access funding from international financing institutions such as the World Bank and International Monetary Fund.
Of the total debt, the domestic debt stands at $1,171bn, while the economy is affected by other factors such as decline in trade, exports and production, which have constrained the country’s economic growth.
Kuwadzana East MP Nelson Chamisa (MDC-T) said the debt overhang was going to affect the livelihoods of future generations.
“When one looks at the debt overhang that we have in the country of $8bn, one will say contracting debt is a very bad culture.
It is symptomatic and indicative of a culture of consumption beyond our capacity. It shows a runaway appetite and an expenditure that is above what we are able to produce and for that simple reason, this is a very important aspect that has to be dealt with in the country,” Chamisa said.
“The culture of contracting debt is not a good one. It starts at household level, it cascades into the nation. It is not a good culture because we are consuming resources on behalf of future generations and it is wrong, particularly in the context of our national dignity and sovereignty.”
State enterprises and parastatals (SEPs) are said to have incurred indebtedness through maladministration, corruption and lack of good corporate governance, which saw bosses at some of the institutions, that want the government to take over their debts, earning several thousands of dollars in salaries and allowances.
MPs have resisted government takeover of some of the debts by SEPs, saying those responsible for looting must pay back the money they got through corrupt means.