Zimbabwe Central Bank Owes Over $4 Billion for Food, Fuel

2023-07-21 18:52

Zimbabwe’s central bank has racked up debts of more than $4 billion to banks and companies, including commodities

Zimbabwe’s central bank has racked up debts of more than $4 billion to banks and companies, including commodities giant Trafigura Group and national flag carrier South African Airways.

The Reserve Bank of Zimbabwe debts relate to the supply of fuel, corn and other goods and services, as the state attempts to prop up the faltering economy. The southern African nation is suffering from market turmoil as new tax rules drive a rebound in the currency, which was previously devalued to tame triple-digit inflation and the world’s highest interest rates.

The central bank’s quasi-fiscal activities have been criticized before by the International Monetary Fund, which has urged authorities to end them. Zimbabwe can’t access credit from international financial institutions as it’s already $17 billion in arrears.

Zimbabwe’s Treasury said it will seek lawmaker approval to assume the central bank’s external obligations. The list of creditors range from individuals to private companies, banks and financial institutions, including the Cairo-based Africa Export-Import Bank.

Read More: World’s Worst Currency Flips to Best to Upset Zimbabwe’s Economy

Private credit has spared the economy from total collapse, according to John Mangudya, the central bank’s governor.

“The creditors were supplying Zimbabwe in good faith, supplying things like fuel in advance, which was consumed by Zimbabweans,” he said by phone on Friday. “It’s only right that the country repays.”

Trafigura is Zimbabwe’s No. 2 private creditor, owed $66 million, behind another commodity trader Holbud Ltd., which is owed $85 million, according to the report. SAA, which has been revived after being placed in business rescue, is owed $61 million for airline services.

Bloomberg News reported last April that Trafigura and Zimbabwe’s government discussed a deal that would give the commodities trader control over output from some of the nation’s biggest mines as repayment for debts.

A spokeswoman for Trafigura declined to comment.

Mangudya sees the recent appreciation of the Zimbabwean dollar against the greenback continuing, which should help to alleviate pricing pressures.

“We expect to see negative month-on-month inflation in July,” he said.

--With assistance from Monique Vanek.

(Updates with comment from central bank governor from fifth paragraph.)