HARARE – Finance minister Patrick Chinamasa yesterday defended former Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono’s quasi-fiscal activities, saying the interventions were necessary to save the economy from collapse.
The trained lawyer told the parliamentary portfolio committee on Finance, which was gathering evidence on the Reserve Bank of Zimbabwe Debt Assumption Bill, that government had assumed the central bank’s $1,2 billion debt after realising that the money was used to prop up Zimbabwe during the hyper-inflationary period.
“The quasi-fiscal activities were taken in an emergency situation,” Chinamasa said.
“The country was under a state of emergency as the economy was going down and the RBZ was now running the economy as an agent of the government,” Chinamasa said.
Responding to questions raised by David Chapfika, chairman of the Finance committee and Bikita West MP Munyaradzi Kereke on how the $1,2 billion debt was accrued, the Treasury boss rallied to Gono’s defence.
Both Kereke and Chapfika have in the past had fierce rows with the ex-Central Bank chief.
“We should not personalise these matters and blame the Reserve Bank for these actions,” Chinamasa said.
“Some of the money was used for agriculture mechanisation programme aimed at supporting the land reform because some of our farmers did not have hoes, let alone capital,” he said.
Chinamasa’s statement gives Gono the last laugh, if not a rare moment of Schadenfreude at the expense of his detractors, with officials acknowledging that he made tremendous contribution to Zimbabwe during its trying times.
The Harare businessman, who retired after a 10-year tenure in December 2013, was at the forefront of President Robert Mugabe’s fight against “crippling economic sanctions.”
During the quasi-fiscal operations of the hyper-inflationary era, all roads led to Gono and the Central Bank.
Analysts say not a single government office, Parliament included, the judiciary, defence forces, State security, prisons, police, embassies, parastatals, local authorities, newspaper groups, ZBC radio and TV, and virtually all sectors of the economy which were not assisted one way or the other by the former central bank chief who today is blamed for the collapse of the Zimbabwe economy.
During yesterday’s debate, Gono’s former advisor and former deputy minister of Finance, Kereke and David Chapfika, chose to personalise the RBZ debt matter although they were at one point involved with the RBZ operations.
Critics who spoke to the Daily News wondered why the Kereke/Chapfika and Gono feud was being allowed to cloud real issues in the august House.
Gono has in the past said quasi-fiscal measures were necessitated by a complete “abrogation of duty by some of the responsible government ministries, boards and management teams at some of the parastatals and local authorities”.
During his tenure, he rolled out such facilities as the Productive Sector Facility to assist companies to access cheap funding to boost production across all sectors of the economy and in a bid to boost production.
On the other hand, Gono also introduced the Agriculture Sector Productivity Enhancement Facility, the Parastatals and Local Authorities Re-orientation Programme and then the Basic Commodities Supply Side Intervention.
Because not every sector accessed the money, the programmes did not work out according to plan, as companies would buy expensive inputs from other sectors that were not covered, which did not help in reducing the prices.
In the end, the RBZ got engaged in non-productive sector financing.
Chinamasa, who was accompanied by RBZ governor John Mangudya, was also taken to task by legislators over the demonetisation of the Zimbabwean dollar.
Various MPs demanded that government put a demonetisation programme under the RBZ Assumption Bill Debt as part of efforts to restore confidence in the banking sector.
Chinamasa ruled out putting the programme under the RBZ Assumption Debt Bill saying that it was another matter that was going to be handled separately by government.
Treasury last year was yet to determine the exchange rate to use in settling payments of Zimbabwean dollar account holders.