A SPECIAL purpose vehicle set to take up banks’ accrued debts, the Zimbabwe Asset Management Company (Zamco), has so far recovered only 23,2% of the $1,13 billion toxic money, the minister of Finance and Economic Development, Mthuli Ncube has revealed.
BY MISHMA CHAKANYUKA
Zamco, a creation of the central bank in 2014, was formed to mop up non-performing loans (NPLs) after a deceptive culture of dishonouring credit obligations creeped in the banking institutions, obstructing them from disbursing fresh loans to the market.
Since inception it has been assuming mortgage bonds, non-insider loans and NPLs for companies in good stead until the practice was discontinued last year. It has, however, been suggested that Zamco was formed to conceal loans contracted by political bigwigs.
Presenting the 2019 Mid- Year Budget Review last week, Ncube said the company has only recovered $263,52 million.
“The sunset close for ZAMCO has been initiated and it is now in the resolution and recovery phase of its operating cycle, where focus is on recovery strategies and collection from the borrowers. It has managed to recover 23,2% of its outstanding debt,”Ncube said.
“Total NPLs acquired by ZAMCO amounted to $1,13 billion while total resolved NPLs stood at $263,52 million and outstanding NPLs amounted to $870,7 million.”
He said bank asset quality improved during the period as the NPLs to total loans ratio declined from 6,92% as at December 31, 2018 to 5,58%.
“The improvement in the NPLs ratio, was a result of some banking institutions enhancing their credit risk management practices and underwriting standards, notably loan origination, monitoring, collection and recoveries,” Ncube said.
However, credit to the private sector remained subdued, with an annual growth of 16,20%, from $3,80 billion in May 2018 to $4,4 billion in May 2019.
“Credit to the private sector was utilised for inventory build-up, 23,89%; consumer durables, 14,96%; fixed capital investment, 14,96%; and pre and post shipment financing, 2,17%. Other recurrent expenditures accounted for 39,03% of the total outstanding loans and advances,” Ncube said.
Credit to the government recorded an annual increase of 23,4% from $7,36 billion in May 2018 to $9,08 billion in the period under review compared to an annual growth of 76,6% recorded in 2018, reflecting the effects of fiscal consolidation measures by government as there was no recourse to the central bank.
Ncube said the banking sector’s aggregated core capital increased by 6,92% to $1,69 billion as at March 31, 2019.
“The banking sector remained adequately capitalised, with aggregate core capital of $1,69 billion as at March 31, 2019, representing a 6,92% increase, from $1,58 billion as at December 31 2018. As at March 31 2019, all banking institutions were compliant with the prescribed minimum capital requirements,” he said.