In emailed responses to FinX, an online-based service the International Monetary Fund (IMF) expressed reservations on Government’s plans to issue $600 million worth of Treasury Bills to clear debts owed to Zesa Holdings by local authorities and state authorities.
Said IMF:
The weak financial performance of SOEs (State-owned enterprises) in Zimbabwe constitutes a drain on the Government budget and a significant drag on growth.
Intra-public sector arrears complicate efforts to improve governance and financial discipline. Making progress requires ending the continuous recapitalisations of SOEs by the Government.
The need for the Government to recapitalise SOEs or clear arrears becomes particularly problematic when the fiscal deficit is significant and domestic debt is on a sharp upward trend.
So while dealing with existing arrears is important, it should take place in the context of broader reforms, such as developing an electricity tariff structure that allows ZESA to return to cost-recovery, and improving the governance and oversight of the SOEs. SOEs should enhance their management and operations and prevent the build-up of future liabilities.
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