Zimbabwean government closely monitoring Central Bank debt levels

The Reserve Bank of Zimbabwe accumulated debts of more than US$5 billion as at December 2020 and the Government is closely keeping an eye on developments.

Of the total RBZ debts, the Government has already guaranteed US$2.1 billion worth of debt.

The guaranteed facilities were for the importation of strategic commodities and raw materials which were done on behalf of the Government.

According to the Annual Public Debt Bulletin for the 2020 Financial Year released this week, the central bank’s other debts amounting to US$379 million are not guaranteed by the Government.

Further, the central bank also accumulated legacy debts amounting to US$2.9 billion.

Government is, however, expected to assume these debts once the due diligence, validation and reconciliation process is complete.

“Since Treasury assumed the RBZ debt in 2015, Government is closely monitoring RBZ debt to ascertain the fiscal risks emanating from contingent liabilities in the form of called up guarantees,” reads part of the Debt Bulletin.

Following the policy announcement in the 2021 Monetary Policy Statement on the resolution of blocked funds and foreign exchange legacy debts, Treasury is working on the debt assumption procedures guided by the provisions of the Public Debt Management Act (Chapter 22:21).

The procedures include validation and reconciliation process, Cabinet and Parliament approval for the Debt Assumption Bill.

“The legacy debts resolution framework will be designed to ensure that it is not inflationary and the settlement plan will use long – term instruments taking into account fiscal capacity and debt sustainability. Applications for qualification under the Legacy Debts Framework were closed in August 2020,” reads part of the Debt Bulletin.

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