Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya yesterday exposed former Finance Minister Tendai Biti’s hypocrisy after the former Cabinet minister accused Treasury of failing to seek Parliamentary approval when contracting loans when he did the same during his tenure in the inclusive Government.
Dr Mangudya said this while testifying before the Parliamentary Portfolio Committee on Public Accounts chaired by Mr Biti.
The RBZ chief and former banker explained that Zimbabwe had consistently not had enough foreign exchange to meet foreign exchange balances, hence the deficits.
In tension-filled deliberations, Mr Biti had taken Dr Mangudya to task on why he had failed to seek the approval of Parliament when Government borrowed over $2 billion to fund several projects aimed at reviving the economy.
Dr Mangudya reminded Mr Biti that he followed the same practice when he failed to seek the approval of Parliament during his tenure as Finance Minister after Treasury borrowed money to fund activities related to the former Prime Minister Morgan Tsvangirai.
“What we did was within the Reserve Bank Act, what we did had Ministerial consent, had a legal opinion from the Attorney-General and had national interest of the country,” said Dr Mangudya.
“Let us not forget history. When you were Minister of Finance — I have got the files, — the loans that you also contracted according to the RBZ Act, such loans they never went to Parliament and today to tell me that . . . I will tell you one loan that we did myself (as then CBZ Bank chief executive officer), yourself and the former Prime Minister of the country.”
Mr Biti had to interject before Dr Mangudya had concluded explaining the nature of the loan.
“No, no, no. I am ruling you out of order. We are not discussing about my tenure as Minister of Finance, and you were not even Governor, unless you want to speak on behalf of Governor (Gideon) Gono.
“I am asking you, you have just told us that you borrowed almost a $1 billion outside the provisions of the Constitution and I am saying in your wisdom as a Christian, don’t you think the bank owes this Parliament and people of Zimbabwe an apology?” said Mr Biti.
He asked Dr Mangudya why the RBZ was lending Government beyond the 20 percent threshold allowable at law. Mr Biti said the RBZ gave Government over US$2 billion when it had only $500 million to cover the country for a month.
Dr Mangudya turned the tables on Mr Biti saying it had been happening since 2009 when Mr Biti was Minister of Finance.
He said Parliament was equally to blame for approving a budget with billions of deficit.
“When you approve a budget with a deficit of $2 billion, where do you think the money will come from. I am saying we are all involved. Since 2009 this economy has never had enough foreign exchange to match dollar for dollar but all the money was called US dollars by an Act of Parliament when we converted all our balances into US dollars. There was always that mismatch. Since 2009 this economy has never had a dollar to dollar cover,” said Dr Mangudya.
On bond notes, Dr Mangudya said the surrogate currency had achieved intended objectives of promoting export incentives.
“The export incentives in this country has worked. We need to call the exporting companies and bring them here with me to say whether the export scheme failed. We are quite happy that many people and firms have increased export receipts and for us to be where we are today it is because of exporters who are the foot-soldiers, who are the golden goose laying the golden eggs,” he said.
“What has failed is not the bond note but the economy has expanded much more than the foreign currency required in this country. It is the failure of the economy to generate foreign currency to maintain its parity. Government expenditure increased at a faster rate than the rate at which we were creating foreign currency to maintain parity, so the elephant in the room is not about bond notes but it is about excessive expenditure which has eaten the foreign currency to maintain parity.”