Minister clarifies $18bn stimulus package

THE implementation of the $18 billion Covid-19 stimulus financing for the private sector is still ongoing and the Government is providing only 50 percent guarantee through local banks.

Finance and Economic Development Minister, Professor Mthuli Ncube, said this in Parliament Thursday as he clarified concerns regarding the fund and how certain businesses have accessed it.

This was after legislators had asked why the Treasury was guaranteeing private companies and how are these beneficiaries were selected.

Several private sector leaders have also said they were facing challenges in accessing the funds through banks to which the Treasury has pledged to intervene.

“This is the implementation of the $18 billion Covid-19 response package that we put in place to support companies to come out of the Covid-19 situation.

“Our approach within that programme is to provide guarantees so that we work together with banks to actually provide the loans, we as the Government provide the guarantee and it is never 100 percent. We provide 50 percent,” Prof Ncube explained.

“So, the bank is not covered for the other half as we cover 50 percent and this has worked well in terms of these companies and we will be doing more going forward.”

Prof Ncube urged more business to utilise the funding saying the advantage was that the Government does not have to outlay resources, but was able to leverage and unlock these from the banks to support the private sector.

“Without the guarantees, the banks would not do it and then we are stuck as an economy. We are trying to move forward and this is part of the $18 billion rescue package,” said the minister.

He also explained the selection process for beneficiary companies, which he said was thorough and vigorous as entrepreneurs have come forward and request through banks.

“The banks having processed the requirement for funding of the projects, if they think that it is a viable project, they will approve it. The bank and the project promoter then approach their ministry and Treasury simultaneously,” said Prof Ncube.

“There is a committee in Treasury, a debt management committee that looks through this and analyses. Some of them have been rejected by the way, and some have been accepted.

“So, what we mentioned is what we have accepted. They are processed, they go through various stages of signatories all the way up from the committee up to myself.

“I eventually sign off as the head of the ministry after the permanent secretary has signed it and then we let the borrower know that they have been successful or rather their bank will tell them. After that we then gazette it.”

The minister said the gazetting process was something that is subject to Parliament oversight for transparency and accountability’s sake.

“So, we have started gazetting those and that is a very good practice and a good practice in terms of transparency,” he said.

“These companies go through a rigorous credit analysis process within the banks in the first place. They are clients of the bank that is in question. They would have been scrutinised, their financials would have been analysed and they would have been found to have been credit worthy and worthy of a loan from the bank.”

To ensure adequate scrutiny, Prof Ncube said beneficiary companies were analysed twice by the banks and by the Treasury, which limits chances of them doing shenanigans such as parallel market speculation and so forth.

Further to that, he said banks also do follow ups on the usage of their loans to make sure that these are properly used.

The legislators suggested that the Treasury enhances more publicity around the fund to inform the public on the applications and disbursements to which Prof Ncube concurred.

The minister also clarified that so far, all the guarantees were within the country’s budget limits.

“There is no risk of us overshooting on the budget performance and I stand willing to keep the committee of budget and finance appraised and updated on how we are doing on this,” he said.

“I can tell you that under my watch, there is no risk of over expenditure on budget, I only run balanced budget.”-herald.cl.zw