Zimbabwe Finance Minister Mthuli Ncube has once again ignored parliament’s advice against mortgaging state resources to support non-essential projects after extending over US$15 million guarantees on loans taken by private companies from the Commercial Bank of Zimbabwe.
Several government ministries have faced parliament’s wrath after committing state resources to aid activities which do not benefit the public and could otherwise have been avoided.
In one such similar development, the latest Government Gazette states that Ncube, using his powers as enshrined in sections 20(1) of the Public Debt Management Act [Chapter 22:21], issued a guarantee, binding the Government of Zimbabwe as a surety for the repayment of US$4 million (40% of the Facility) to Sub-Sahara Tobacco (Private) Limited from CBZ.
“Should there be any outstanding amounts due to Lender at the date of maturity of the guarantee, the guarantor undertakes to make the full payment of all amounts payable by the guarantor in terms of this guarantee upon demand from the Lender within thirty (30) calendar days,” the statement said.
Surety was also provided for the repayment of 50% of a $10 million facility to Mbano Manor Hotel/Mambano Hotels (Private) Limited from the CBZ.
Ncube also made another guarantee binding the Government of Zimbabwe as surety for the repayment of 65% of US$11.1 million to Steel Makers Zimbabwe (Private) Limited from the CBZ.
Over the years, the Public Accounts Committee has criticised the government for taking such decisions without due approval from the legislature despite the impending burdens of using taxpayers’ monies to settle the debts.
However, sources in government argue that there is need to save critical companies from collapse after the choking impact of the Covid-19 lockdowns which massively eroded companies’ earnings.
Government last year availed an $18 billion stimulus package to salvage affected companies through guarantees, but it was not yet clear whether these guarantees were made under the commitments at the time of publishing.