Zimbabwe: RBZ Boss Harangued for Borrowing U.S.$1 Billion Without Parly Approval

Photo: The Herald
Reserve Bank of Zimbabwe Governor John Mangudya.

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya was Monday taken to task by Harare MP Tendai Biti's Public Accounts Committee for borrowing close to US$1 billion without seeking parliament approval as per law requirements.

This is after the under-fire central bank chief had revealed to the committee that a total of US$985 million had been borrowed by the apex bank from various external financiers.

Mangudya insisted the transactions were above board and were approved by the finance ministry.

"We received consent from the current Finance Minister as provided for in the current RBZ Act. So all the loans we have acquired have the ministerial consent... " Mangudya said.

He said among some of the debts, US$641 was owed to Afreximbank, US$152 million to the African Development Bank with the Mozambique Central Bank also among its lenders.

"The tenure ranges from three to five years and whatever we did was meant to make sure that the economy works for the good," he said.

Mangudya said collateral used to secure the loans would be future export receipts.

But Biti, who, as ex-finance minister, is familiar with RBZ's operations, said the premier bank had no authority to mortgage the nation's future exports without public consent.

"Your actions are extremely dangerous governor because they violate Section 327 of the constitution. The loans are actually not valid.

"In other words, you can be sued for paying off those loans unless approved by parliament," Biti said.

Biti said parliament was not concerned about any justifications that did not pay regard to the country's laws.

"We are not concerned with the political economy or reasons behind borrowing of the loans but compliance with the law and the law is very clear honourable governor, that when an external debt is acquired, parliament has to approve the same. And in this case, the information you are providing is actually news to us and to the country.

"So how come you have been acquiring almost a US$1 billion debt without parliamentary approval?

"Our problem is that apart from other debts, you have extended US$1.3 billion RTGS to Zimbabwe Asset Management Company and now you have another US$1 billion in loans at hand.

"Why haven't you sought approval of these loans from parliament as requested by the constitution of Zimbabwe?

"The constitution is the Supreme Law of the country if you have any doubt about that go and read Section 2 of the constitution of Zimbabwe?"

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