Forget about ‘missing planes’, is Air Zimbabwe missing its debts?

Air Zimbabwe
Air Zimbabwe's MA60: The airline is not missing its planes, but it's missing $47m worth of loans

Air Zimbabwe has hogged a fair bit of the headlines following the latest report by the Auditor General.

Reports that three planes had gone missing at the flailing airline, based on misinterpretation of the Auditor General’s report, did not help a public mood darkened by tough daily struggles.

However, drowned out by the sensation created by the supposedly missing, defunct 14 year old planes, a far more pertinent matter went largely unnoticed.

Looking at Air Zimbabwe’s 2013 accounts, the Auditor General picked a significant discrepancy between loan figures provided by the airline and its parent ministry.

“The company had an outstanding loan amounting to US$59,299,078 from the parent Ministry as at December 31, 2013,” the Auditor General noted.

“The Ministry of Transport and Infrastructural Development confirmed in writing that the loan amount outstanding as at 31 December 2013 was US$11,499,781 which resulted in an unexplained variance of US$47,799,297 when compared to the balance of US$59,299,078.”

The risk, she continued, was that the airline’s loan balances could be misstated. She recommended that the loan variance be investigated and that the terms of the loan from the transport ministry should be established.

Air Zimbabwe gave a typically terse response to the Auditor General’s query: “Observation is noted. The Airline is engaging the Ministry for documentation relating to the loan.”

The exact extent of Air Zimbabwe’s debt is of great public interest, particularly at a time when Transport Minister Joel Biggie Matiza is pushing to load the company’s US$341 million debt on taxpayers already burdened by previous contentious parastatal bailouts. The public might be paying for a debt that Air Zimbabwe cannot account for.

Of the airline’s total debt, only US$26 million is owed to foreign entities, with the rest due to local debtors, mostly government departments.

In 2015, Parliament passed the RBZ Debt Assumption Act, which saw government taking over the central bank’s US$1.4 billion liabilities. Last year, the government also passed Zisco’s US$495 million debt to the taxpayer. While the Air Zimbabwe debt is mostly local and due to government, Zisco owes nearly US$220 million to foreign creditors.

Finance Minister Mthuli Ncube has, however, recently indicated that the government might rethink its parastatal debt takeover policy. 

“I always say automatic debt assumptions are not good finance, they are actually bad finance. Good finance says that the debt, not necessarily 100 percent, but at least part of it should stay on the balance sheet of the company; it is a disciplining mechanism on the management of the company,” Ncube said.

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