Zimbabwe parly miffed by high parastatals debt

THE Parliamentary Portfolio Committee on Budget, Finance and Economic Development is conducting public hearings to determine the level of debt held by State-owned firms, with early signs suggesting that all of them are technically bankrupt.

A report on the hearings is expected to be published in the next three weeks.

This was revealed by a member of the committee, Edwin Mushoriwa, during the ongoing fifth edition of the Zimbabwe debt conference in Harare.

Mushoriwa said it was worrisome that, at one point, these debts would be assumed by government, a move which would see the burden being offloaded to the taxpayers.

"We are conducting public hearings accounting for the amount of debt that is owed by State enterprises," he said.

"What we have been discovering so far, through going to the primary source, checking their financials, and the gearing of these companies, we are finding that so far, the majority of the State enterprises are technically insolvent and the reason why they are still hanging on is that they have had government as their guarantor.

"In a normal business, most of the entities, mention any of them, are technically insolvent and that debt, one way or the other, will be assumed by the government. The hearings that we are conducting will help the debt office to understand and ascertain the level of indebtedness that the government has responsibility to take over from these parastatals."

The discussion is coming at a time when the country is frantically engaging its creditors in a bid to extinguish its debts that have been accumulating over the years.

Mushoriwa said it was not only parastatals that were struggling, but local authorities as well.

He said the question of taking loans needed to be tackled from an angle where a loan is used for the purposes for which it was taken.

"This mindset of borrowing and using money for other purposes can actually happen in a government where we do not borrow in a responsible manner. I don't think it is right for us to be crybabies as Zimbabwe when we acquired a debt which we possibly didn't need or without proper due diligence.

"We have had cases when we have done that, for example agriculture. Agriculture is the backbone of the economy. When anybody speaks about agriculture and that we are going to acquire money to boost agriculture, on paper it's a noble thing. But we also need a mechanism to judge the performance of what we are doing," he said.

Mushoriwa said to date, government had an exposure of US$2 billion, adding that the US$3,5 billion from the global compensation agreement implied that government had splurged in excess of US$31 billion in agriculture with no matching returns.

"In the past 20 years, we have actually poured a lot of money. You will recall that there was a time we would give fertilisers, fuel and so on to the farmers, but nothing was coming out.

"We moved to the mechanisation programmes, where tractors and combine harvesters were churned out. An amount of US$3,5 billion was paid for the mechanisation. After that, we urged farmers to borrow money, and those farmers then failed to repay the money."

He said government had to come up with the Zimbabwe Asset Management Corporation to mop up about US$6,5 billion debt owed by farmers.

According to Mushoriwa, the farmers were unable to borrow from the banks again, so government established command agriculture and invested billions of dollars in the hope that farmers would produce.

To date, Mushoriwa said, the number of farmers who have paid that debt stands at 18%, meaning that around 80% has not been paid and at some stage, government will have to take over that debt.