RBZ’s list of creditors has sister central banks, external financial institutions and local banks among others. It also includes the former workers who were retrenched in January and are still to be paid their full packages due to cash constraints. “The Bank will pay its creditors once funds are available. The aggregate requirements are receiving consideration by Treasury as part of the 2012 budgetary provisions,” Gono said in written responses to Standardbusiness.
RBZ board resolved last year that government should take over the central bank’s debt to allow the institution to start on a clean slate. However, nothing has moved along that front as the proposed bill died before it even went through Cabinet.
RBZ has a US$1,1 billion owed to central banks, external and local financial institutions. As of June 30 last year, the bank owed a total of US$80,2 million to sister central banks such as South African Reserve Bank (US$10 million); Malaysian central bank, Bank Negara ( US$49,8 million) and US$20,4 million to the Reserve Bank of Malawi.
It also owes regional and continental banks who provided roll-over facilities for grain, fertilizer and oil importations US$122,2 million. RBZ said, of that debt, US$55,1 million was accumulated prior to 2003.
On the local front, RBZ owes financial institutions through corporates (private sector) foreign currency accounts deposits of US$359,8 million and US$79,9 million in statutory reserves.
Statutory reserves — amount of money any bank has to maintain with RBZ at 0% for every deposit received from a customer — were scrapped in June last year as part of risk containment measures in the banking system. However, government owes the central bank US$1,4 billion, which the monetary authorities say would be enough to extinguish its debt and remain with US$300 million.
The US$300 million, RBZ says, would then be used to beef up the bank’s lender of last resort role.Treasury gave RBZ US$7 million this year to perform its lender of last resort role, which had been suspended in 2008.
The bank is in the process of disposing its non-core assets and concentrate on its core business. The assets had been accumulated when the bank engaged in quasi-fiscal activities in the period 2006-2009 in response to the growing national needs.
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The amended legislation removed that clause which was blamed for fuelling hyperinflation by allowing RBZ to engage in activities that fall under the realm of treasury.Gono said the disposal of the assets is in progress “and it would be premature to explicitly announce the status of this process at this stage”.
RBZ says it had incurred some extraordinary debts when it financed national interests such as funding the March 2008 harmonised elections. It said RBZ had intervened by mobilising funds to clear the debt owed to the International Monetary Fund to avoid the country being kicked out of the grouping.
