The IMF has privately warned Zimbabwe that state payouts to
a company linked to global commodities trader Trafigura were pushing the
shortages-plagued economy to the brink, reviving fears of corruption at the
highest level of government.
Payouts to Sakunda Holdings, a fuel company owned by an
ally of President Emmerson Mnangagwa, were in effect met by the central bank’s
printing money. The transactions severely undermined the country’s currency —
the Zimbabwe dollar — only months after it was introduced, the Washington-based
institution told Harare this month, according to two people with knowledge of
the discussions.
The payments have shed light on the financial links between
the state and Sakunda’s chief executive, Kudakwashe Tagwirei, a businessman
close to the ruling Zanu-PF party. Sakunda also owns a stake in Trafigura
Zimbabwe, a joint venture with Trafigura, one of the world’s largest oil
traders.
Sakunda received $366m in government bonds as payments for
supplying “Command Agriculture”, a state farm subsidy scheme that Mr Mnangagwa
has championed. However, when Sakunda redeemed some of the bonds, the payouts
were made in Zimbabwe dollars at an exchange rate that translated into massive
money printing.
The redemptions led to a 80 per cent surge in Zimbabwe’s
monetary base — money in circulation including bank reserves. The IMF’s
programme with Harare has set a target of 8 to 10 per cent for this year.
Mnangagwa has welcomed the account freeze, saying it would
stop people from trying to undermine the currency
Following the IMF warning, Zimbabwe’s regulators last week
froze the bank accounts of Sakunda and other companies. The move temporarily
halted a sharp decline in the Zimbabwe dollar, also known as the RTGS dollar.
However, the consequences of the payments to Sakunda have
added to disquiet in Zimbabwe over allegations of “state capture” — the
exploitation of public institutions and funds for private interests. Opposition
politicians have accused Mr Tagwirei of using his connections to the ruling
party and the central bank to build his business.
Tendai Biti, a former finance minister and lawmaker with
the opposition, said: “If ever there was state capture, it is Sakunda.”
Since replacing the late dictator Robert Mugabe following a
2017 coup, Mr Mnangagwa has vowed to make Zimbabwe “open for business”.
In February, he reintroduced the Zimbabwe dollar, a decade
after its abolition in the aftermath of hyperinflation. But the currency has
since fallen more than 60 per cent against the US dollar, fuelling triple-digit
inflation and dire shortages.
The $366m bonds were issued in US dollars in January — the
latest of hundreds of millions of US dollars in government bonds issued to
Sakunda in recent years. When the new currency was created a month later,
Zimbabwean contracts in US dollars were generally converted one-to-one into the
new currency.
But in July, Sakunda was paid by the central bank on the
basis of eight to nine RTGS dollars per dollar of original face value, people
with knowledge of the financial transactions said.
Mr Mnangagwa has welcomed the account freeze, saying it
would stop people from trying to undermine the currency.
The government has denied any wrongdoing. Zimbabwe’s
finance ministry, the country’s central bank and Mr Tagwirei and Sakunda did
not respond to many requests for comment. The IMF declined to comment.
Trafigura also declined to comment on the allegations against
Mr Tagwirei. A spokesperson for Trafigura said: “Trafigura Zimbabwe is only
involved with petroleum distribution and has no involvement with the activities
of Sakunda Holdings in Zimbabwe.”
The IMF has been monitoring economic reforms in Zimbabwe since
May, part of a cautious testing of the waters by western nations on future
financial support for Mr Mnangagwa’s government. Abuses by Mr Mnangagwa’s
security forces have made international investors and leaders warier of
Mugabe’s successor. Financial Times
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