HARARE — Zimbabwean government ministries have struggled to open U.S. dollar bank accounts because commercial banks fear sanctions exposure and penalties associated with dealing with government institutions and politically exposed persons, Deputy Finance Minister David Mnangagwa has told Parliament.
Mnangagwa said the situation has forced Treasury to make foreign currency payments directly to suppliers on behalf of ministries, departments and agencies.
“All payments are initiated by MDAs. However, foreign currency payments are paid by Treasury on behalf of MDAs since they do not have Nostro accounts or sub-PMG accounts,” Mnangagwa said on Wednesday.
“This is done to control the forex by Treasury.”
He was responding to Mbizo Constituency legislator Corban Madzivanyika, who questioned the legality of Treasury making direct payments to suppliers instead of transferring money through the respective ministries.
Madzivanyika cited public finance regulations which he said required accounting officers to make payments after funds had been transferred into their ministries’ bank accounts.
Mnangagwa said that procedure was followed for local currency payments, but U.S. dollar transactions presented a different problem.
“When it comes to USD payments, we pay directly because ministries do not have USD accounts and are unable to pay the clients,” he said.
“This has been the most efficient way to make these payments.”
Madzivanyika then pressed Mnangagwa to explain why ministries could not simply operate both U.S. dollar and ZiG-denominated accounts.
Mnangagwa attributed the difficulty to sanctions and banks’ concerns about their exposure when dealing with government entities.
“We then go back into the whole sanctions debate and the exposures that we have,” Mnangagwa said.
“When banks are dealing with either politically exposed people or Government institutions that could potentially get them fined, they would rather just not open those accounts.”
He said individual banks could make different decisions depending on their appetite for risk.
“So, depending on the bank that you are dealing with, some may take the risk and others may not but Government-wide, we have had difficulty opening sub-accounts in our local and commercial banks for this reason,” Mnangagwa said.
“That is precisely why we pay directly to the client or the supplier and they deal with their foreign obligations without Government coming into that payment chain.”
The exchange arose after Madzivanyika asked whether direct Treasury payments to suppliers were legal and consistent with public finance rules requiring proper accounting for government expenditure.
Mnangagwa maintained that ministries remained responsible for initiating payments and keeping the underlying contracts, while Treasury handled foreign currency payments because the ministries lacked the necessary U.S. dollar accounts.
