RYAN CHIGOCHE
Consumer staples concern, MedTech Holdings, says the delays in extinguishing the legacy debts has limited the group’s ability to negotiate foreign credit sales.
This comes as the central bank assumed legacy debts to cover the period between January 2016 and February 2019.
In 2019, the central bank called on all those whose blocked funds were approved to transfer the respective local currency to the central bank by April 30, 2020, through normal banking channels.
MedTech has legacy debts of R25.5m. of the debt, R23.4m had been validated while appeals have been lodged for R2.1m. Of the validated debts an amount of ZAR3,8million has been paid to foreign creditors, board chairman Rose Mazula said in a statement accompanying the financial results for the half year ended June 30.
“At this stage, the group is unsure when the remaining payments will be made for the debts validated which are owing and when a response will be received for appeals lodged. Delays in the payment of legacy debts limits the Groups ability to renegotiate foreign credit,” Mazula said.
The legacy debts burden by MedTech has haunted a number of local firms which are finding it difficult to borrow from offshore creditors and financiers.
Most lenders across the world have now become risk-averse when dealing with Zimbabwe companies.
In February, RBZ governor John Mangudya said the bank’s Exchange Control had processed and validated blocked funds in an amount of US$1.2bn from 730 applications out of 1080 requests.
Of those processed, 299 transactions with a value of US$861m were rejected for various reasons ranging from double-dipping to lack of supporting documentation, he said.
Mangudya said the balance of 350 transactions with a value of US$457m was supposed to have been processed by February 29 and that validated blocked funds exclude the legacy foreign exchange obligations of US$361m under the RBZ Debt Assumption Act.
After the government brought back the Zimbabwe dollar on 24 June 2019, ending the 10-year multi-currency regime, RBZ issued a press statement directing all banks to transfer to the RBZ all the Zimbabwe dollars they are holding as counterpart funds for the foreign currency historical or legacy debt owed to creditors.
