7 December 2012

Zimbabwe: Inter-Parastatal Debt Balloons to U.S.$1 Billion

Zimbabwe's inter-parastatal debt ballooned to a staggering US$1 billion at the beginning of this month, up from US$600 million in April, in a development further demonstrating the coalition government's failure to deal with the country's socio-economic ills.

This was disclosed by State Enterprises minister Gorden Moyo in a memorandum on the progress of state enterprises and parastatals (SEPs) dated December 3 2012, which cited government departments and local authorities as being among the culprits.

While the memorandum sought to paint an optimistic picture by detailing improvements in the operations and cash-flow of some of the SEPs like the Zimbabwe Electricity Distribution and Transmission Company, there is no hiding the fact that the inclusive government has woefully failed to arrest parastatal rot.

"Inter-parastatal debt has been a major challenge for most SEPs and this has led to cash-flow problems, inability to attract investors and access to lines of credit due to unattractive balance sheets," reads part of Moyo's report.

Disclosure that government would pay US$124 466 249 to SEPs to meet their statutory obligations to Zimra is a tacit admission that government has failed to restore profitability and good corporate governance to the troubled SEPs.

Moyo also revealed parastatals neglected even the most basic tenets of good corporate governance.

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