‘$1 billion RBZ loans unconstitutional’

PARLIAMENT’S Public Accounts Committee says loans amounting to $985 million, which were contracted by the central bank from regional lenders, are unconstitutional and invalid.
This comes four years after parliament lit up over a debate about government’s takeover of the reserve bank’s $1,4 billion debt in 2015, which had also been contracted without the approval of parliament.
Former Finance minister Tendai Biti, who chairs the committee which also recently took treasury secretary George Guvamatanga to task over the same issues, berated Reserve Bank governor John Mangudya in a parliamentary hearing on Monday.
“Governor, parliament has got to approve these loans, and in this case, none of these loans have been approved by parliament, they are actually news to us. How is it that you have acquired almost a billion dollars in debt without parliament approval as is required by the constitution of Zimbabwe,” he said.
“It is even more dangerous Mr. governor, in that your loans are actually invalid. In other words, someone can actually sue you for paying all those people you have been paying,” Biti charged.
Biti read out section 327 of the constitution of Zimbabwe which says: “An international treaty which has been conducted or executed by the president or under the president’s authority, does not bind Zimbabwe until it has been approved by parliament.”
“So these loans are not binding, when you have been paying for them you have been paying them illegally,” he said.
The loans, which the central bank says it contracted to support the country’s foreign currency reserves, include facilities of $641 million with the Afreximbank, a loan of $152 million from the PTA bank, as well as smaller loans from Banco de Moçambique (Bank of Mozambique) and a coin minting company from South Africa.
“According to the Reserve Bank Act, the bank can borrow funds the way it sees fit and request the minister of Finance for consent. So all the loans that we have acquired from the Afreximbank, the PTA bank and others have all got ministerial consent,” Mangudya said in his own defense.
“We also had legal opinion from the attorney general’s office, so from our perspective, there is nothing in the Reserve Bank Act where I am supposed to have that compliance function. We go by the Act, and it is very clear about what we should do and we have done all that is required of us,” the central bank boss said.
Biti interjected: “These things mean nothing John, the constitution is above all these things.”
Mangudya said the loans are mostly secured by future gold exports, to which Biti responded with even more agitation.
“So you have mortgaged the country’s export receivables without parliament approval, hakusi kushaya matyira here ikoko (is that not being cheeky),” he exclaimed.
Mangudya and Biti also debated over the apex bank’s role in the issuance of treasury bills to finance operations of the Zimbabwe Asset Management Corporation, as well as the government’s growing overdraft with the bank, all of which the committee contended should not have been done without the parliament’s approval.
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