Business / Economy
RBZ to offload firms
30 Dec 2010 at 02:24hrs | Views
THE Reserve Bank of Zimbabwe is planning to dispose of its shareholding in three companies listed on the Zimbabwe Stock Exchange as it
seeks to raise funds to retire part of its multimillion dollar debt overhang.
In a recent meeting with the Parliamentary Portfolio Committee on Budget and Finance, RBZ Governor Dr Gideon Gono confirmed that the
central bank would sell some of its investments to clear debts owed to various creditors.
The central bank governor, who also doubles as the bank's chairman, said the supreme bank would sell its shareholding in Transload, Thuli
Coal, Cairns Holdings, Astra Holdings and Tractive Power among other investments.
"We are trying to sell some of the bank's subsidiaries including Astra, Transload, Cairns, Thuli Coal and Tractive Power," said Dr Gono.
Our business correspondent understands that the apex bank, through its investment vehicle Finance Trust of Zimbabwe, would sell its 64
percent shareholding in Cairns, 65 percent interest in Astra and 62 percent stake in Tractive Power.
Industry sources told our correspondent that the RBZ was busy trying to determine the net value of the investments, but indicated the
assets would certainly fall far short of the financial resources required to clear the bank's liabilities.
Disposal of the assets to clear the liabilities is part of efforts to transform the RBZ and that includes reducing the staff complement
by 1 600 and refocusing the bank to its core functions.
The central bank is working on measures to liquidate its US$1,2 billion debt overhang, 65 percent of which was inherited from previous
administrations, as the liabilities were constraining it from attaining full functionality.
The central bank's debt has been referred to Cabinet, which would decide on the best way to proceed on retiring the liabilities. Cabinet
would also determine how much of the US$1,2 billion the central bank would have to pay off with the State assuming the balance, but this
would reportedly be preceded by a thorough audit of how the liabilities accrued.
The debts accumulated from critical national programmes such as support to agriculture, procurement of maize, medicine, supporting
elections, parastatals, State enterprises and Government ministries, agencies and departments.
In addition, during such critical times the central bank utilised foreign currency of non-governmental organisations and companies that
were sitting in various bank accounts and also spent financial institutions' statutory reserves.
Banking institutions would be restituted about US$83 million for the statutory reserves used by the RBZ.
The central bank would also compensate corporates an amount of US$80 million and NGOs US$20 million for money used by the central bank.
Dr Gono said US$184 million was used to settle Zimbabwe's arrears with the International Monetary Fund, enabling the country to retain
its membership of the Bretton Woods institution and receive US$500 million after the global financial crisis.
The RBZ also owes the Reserve Bank of South Africa US$10 million, Equatorial Guinea US$222 million for fuel supplies while Malawi's
central bank is owed US$20 million for funds extended to cover critical national programmes.
A component of the RBZ's debt relates to quasi-fiscal operations carried out in support of farm mechanisation (US$200 million), but the
bank would have no challenges in this regard as the beneficiaries would repay the loans
seeks to raise funds to retire part of its multimillion dollar debt overhang.
In a recent meeting with the Parliamentary Portfolio Committee on Budget and Finance, RBZ Governor Dr Gideon Gono confirmed that the
central bank would sell some of its investments to clear debts owed to various creditors.
The central bank governor, who also doubles as the bank's chairman, said the supreme bank would sell its shareholding in Transload, Thuli
Coal, Cairns Holdings, Astra Holdings and Tractive Power among other investments.
"We are trying to sell some of the bank's subsidiaries including Astra, Transload, Cairns, Thuli Coal and Tractive Power," said Dr Gono.
Our business correspondent understands that the apex bank, through its investment vehicle Finance Trust of Zimbabwe, would sell its 64
percent shareholding in Cairns, 65 percent interest in Astra and 62 percent stake in Tractive Power.
Industry sources told our correspondent that the RBZ was busy trying to determine the net value of the investments, but indicated the
assets would certainly fall far short of the financial resources required to clear the bank's liabilities.
Disposal of the assets to clear the liabilities is part of efforts to transform the RBZ and that includes reducing the staff complement
by 1 600 and refocusing the bank to its core functions.
The central bank is working on measures to liquidate its US$1,2 billion debt overhang, 65 percent of which was inherited from previous
administrations, as the liabilities were constraining it from attaining full functionality.
The central bank's debt has been referred to Cabinet, which would decide on the best way to proceed on retiring the liabilities. Cabinet
would also determine how much of the US$1,2 billion the central bank would have to pay off with the State assuming the balance, but this
would reportedly be preceded by a thorough audit of how the liabilities accrued.
The debts accumulated from critical national programmes such as support to agriculture, procurement of maize, medicine, supporting
elections, parastatals, State enterprises and Government ministries, agencies and departments.
In addition, during such critical times the central bank utilised foreign currency of non-governmental organisations and companies that
were sitting in various bank accounts and also spent financial institutions' statutory reserves.
Banking institutions would be restituted about US$83 million for the statutory reserves used by the RBZ.
The central bank would also compensate corporates an amount of US$80 million and NGOs US$20 million for money used by the central bank.
Dr Gono said US$184 million was used to settle Zimbabwe's arrears with the International Monetary Fund, enabling the country to retain
its membership of the Bretton Woods institution and receive US$500 million after the global financial crisis.
The RBZ also owes the Reserve Bank of South Africa US$10 million, Equatorial Guinea US$222 million for fuel supplies while Malawi's
central bank is owed US$20 million for funds extended to cover critical national programmes.
A component of the RBZ's debt relates to quasi-fiscal operations carried out in support of farm mechanisation (US$200 million), but the
bank would have no challenges in this regard as the beneficiaries would repay the loans
Source - Byo24
