PHILLIMON MHLANGA
The Reserve Bank of Zimbabwe (RBZ) will soon meet chartered accountants and the Public Accountants and Auditors Board (PAAB) to discuss a proposal to have a programme for accounting and how to extinguish foreign exchange blocked funds, Business Times can report.
The central bank took over the burden to settle foreign debt on behalf of the troubled companies after dumping the then bond-US$ parity in favour of an interbank.
The debt has not been settled amid fears by local players some foreign firms may stop raw materials supplies.
Institute of Chartered Accountants of Zimbabwe (ICAZ) president Duduzile Shinya said her organisation was ready to “support the bank on this initiative”
“The bank (RBZ) is putting in place a definitive programme for accounting and extinguishing of foreign exchange obligations under the blocked funds and foreign exchange legacy-debt framework. This framework will be designed to ensure that it is not inflationary and takes into account local and international audit requirements,” Shinya told Business Times.
“Again, this is welcome. Some entities had modified opinions or reporting of such as a key audit matter in their more recent financial statements. We are looking forward to this more structured approach as resolution of this issue will improve audit opinions.”
RBZ governor, John Mangudya said: “ICAZ has proposed to assist in the blocked funds initiative. We are meeting with ICAZ and PAAB to align our positions.”
There have been fears that the central bank will struggle to honour the commitment given that the country has been reeling from foreign currency challenges over a period of time.
The debt burden has spooked business and companies which are now finding it difficult to borrow from offshore creditors and financiers.
Most lenders across the world have now become risk averse when dealing with Zimbabwean companies.
The debts have continued to weaken companies’ balance sheets and remain a deterrent to firms’ chances of courting foreign investors.
Most investors demand clean balance sheets before extending the much needed fresh international capital.
This has also left most of the companies technically insolvent and on the brink of bankruptcy.
Unsettled foreign obligation has seen suppliers of raw materials stopping suppliers ordering local firms to prepay for the raw materials.
They are, however, finding it difficult to access foreign currency at the formal interbank market, which the central bank said was being abused by some companies.
