Zimbabwe’s Financial Crisis Deepens as Government Defaults on Repayments

Widespread Defaulting on Repayments Threatens Country’s Stability

The Office of the Auditor-General (OAG) has uncovered shocking cases of government entities defaulting on repayments, leading to a financial crisis that is threatening the stability of Zimbabwe.

Breaches of Constitutional Obligations

According to the OAG’s report, several ministries and funds have been found to be in breach of their constitutional obligations. The report highlights numerous instances where government entities have made significant payments without proper warrants, leading to a risk of unauthorized expenditure.

Notable Case: Ministry of Finance and Economic Development

The Ministry of Finance and Economic Development was found to have made payments worth nearly ZIM$2.2bn to the National Oil Infrastructure Company without invoices or statements being authorized by the Ministry of Energy beforehand. This raises concerns about the potential for suppliers to be paid for services that were not actually rendered.

Basic Failures in Accounting Record Keeping

The OAG also discovered cases of basic failures in accounting record keeping, making it impossible to determine the financial position of several ministries and funds under review. For example:

• The Infrastructure Development Bank of Zimbabwe failed to formally communicate with multiple ministries as to deposits made to it, resulting in a sum of ZIM$20.6m being deposited but only ZIM$2.1m being confirmed utilized.

Delays and Complications in Audit Process

The report reveals that several government entities have been slow to provide audit information, leading to delays and complications in completing the audit process. For instance:

• The National Housing Fund submitted its financial statements 17 months after the statutory deadline, rendering the information useless for auditing purposes.

Call for Action: Transparency and Accountability

The OAG’s findings are a stark reminder of the need for greater transparency and accountability in Zimbabwe’s public finances. The government must take immediate action to address these failures and ensure that taxpayers’ money is being used effectively and efficiently.

Prioritizing Good Governance, Transparency, and Accountability

As Zimbabwe grapples with a financial crisis, it is imperative that the government prioritizes good governance, transparency, and accountability to restore confidence in its ability to manage public funds effectively.