## 1zweea2019002 — Institutional Coverage of the General Government in Zimbabwe

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---

### Summary of mission outcomes and priority recommendations
- Mission conducted in Harare, Zimbabwe during April 16–27, 2018.
- Authorities are making some progress toward higher quality and more comprehensive GFS, but sufficient information for meaningful monitoring and surveillance of the public sector is a long-term goal with several remaining challenges.
- High-level recommended actions:
  - Chart of Accounts (COA) technical assistance follow up mission to review the COA built using the SAP system.
  - Inclusion of local government statistics into the MoFED compilation and reporting framework; requires communication between MoFED and MLGPWNH and a standardized reporting template fitting the new COA.
  - Inclusion of extrabudgetary (EBU) units in MoFED’s compilation and reporting framework; requires communication between MoFED and relevant Ministries and a standardized reporting template fitting the new COA.
  - Inclusion of public corporations (state owned enterprises and parastatals) in MoFED’s compilation and reporting framework; requires communication between MoFED and relevant Ministries and a standardized reporting template fitting the new COA.
  - Movement towards a modified accrual accounting system recording all non-cash transactions both above and below the line to ensure accurate balancing items consistent with GFSM 2014.
  - Creation of full financial balance sheets for all public-sector entities (both consolidated and non-consolidated).
  - Continued monitoring of contingent liabilities through the Debt Management Office in the MoFED.
  - Review of cross-ministry compliance with the Republic of Zimbabwe Public Finance Management Act (2009) (ZPFMA09) to ensure full government compliance.

- Priority recommendations with target dates and responsible institutions:
  - December 2018 — Complete Chart of Accounts and generate financial reports for Budgetary Central Government. — MoFED (Accountant General)
  - June 2019 — Roll out new COA to Local government using SAP system. — MoFED and MLGPWNH
  - December 2019 — Roll out new COA to all other general government subsectors using SAP system. — MoFED and other relevant Ministries
  - June 2020 — Roll out new COA to public sector corporations using SAP system. — MoFED and other relevant Ministries

### Institutional coverage and subsector counts
- General observation: identification of general government institutional units in Zimbabwe is relatively comprehensive within the MoFED; sufficient information exists centrally to identify all general government units.
- Main challenges: significant gaps in centralized and standardized financial information (see Section B).

- Budgetary Central Government:
  - Consists of around forty-five institutional units.
  - Several units are classified across a range of ministerial portfolios with varying degrees of compliance with the ZPFMA09.
  - The AG’s office currently receives sufficient information to produce a consolidated financial statement for the budgetary central government only.

- Non-autonomous social insurance scheme:
  - Exists for public sector employees. Financial data unavailable but can be estimated from available data (see Section B).

- Extrabudgetary Central Government (EBU):
  - Consists of around one hundred and forty-five institutional units.
  - Generally classified under ‘State Owned Enterprises’ and/or ‘Parastatals’ across ministerial portfolios with extremely limited degrees of compliance with the ZPFMA09.

- Local Government:
  - Consists of five local boards, twelve town councils, eight municipalities, sixty rural district councils, and seven city councils.
  - Power and autonomy have significantly increased; centrally influenced by MLGPWNH which can appoint and/or remove local officials.

- Social Security Funds:
  - One autonomous social security fund controlled by the general government: The National Social Security Authority (NSSA).
  - NSSA has a great deal of readily available financial information, but this is not integrated with budgetary central government statistics through the SAP system.

- Recommended action:
  - Authorities should maintain and update accurate records of general government institutional units. An institutional table comprising all general government institutional units should be updated regularly and disseminated publicly.

### Legal framework and reporting status
- Legal framework:
  - Zimbabwe Public Finance Management Act, 2009 (ZPFMA09) is fairly well constructed but not complied with; degree of compliance is very limited as noted in the most recent Auditor General Annual Report.
  - ZPFMA09 Part I, Section 3 objective: “The object of this Act is to secure transparency, accountability and sound management of the revenues, expenditure assets and liabilities of any entity specified in section 4(1).”
  - ZPFMA09 Part IV, Section 32 requires: “(1) Every director of finance shall prepare or cause to be prepared the annual [quarterly/monthly] financial statements of the Ministry concerned and shall submit such statements to the accounting officer in that Ministry and to the Accountant General within thirty days of the year concerned.”
  - ZPFMA09 Part IV, Section 36 requires monthly/quarterly/annual financial statements to state and compare actual revenue and actual expenditure (distinguishing capital and recurrent) with budgeted amounts; subsection (2) allows the Accountant General to determine format and additional details of statements.

- Reporting status:
  - Zimbabwe has not reported GFS data for any subsector of the general government to the IMF’s Statistics Department since 2009.
  - MoFED is producing monthly/quarterly/annual out-turn bulletins based on a modified GFSM 1986 presentation.
  - Mission created GFSM 1986 to GFSM2001/14 bridge tables for the years 2015–2017 using MoFED out-turn data.

- Net lending/borrowing (budgetary central government) — mission and source figures (from Figure 3):
  - 2015: MoFED Outturn -0.13; Mission Conversion -0.98; WEO -0.99
  - 2016: MoFED Outturn -1.42; Mission Conversion -1.35; WEO -1.36
  - 2017: MoFED Outturn -2.70; Mission Conversion -2.22; WEO -1.67
  - 2018: MoFED Outturn (n/a); Mission Conversion (n/a); WEO -0.61*  (*est)

- Budgetary central government revenue and expenditure:
  - Figures 4(a) and 4(b) show discrepancies between MoFED out-turn, mission conversion, and WEO data for 2015–2018.
  - Majority of differences stem from the treatment of transactions in financial assets:
    - GFSM 1986: transactions in financial assets are considered government expenditures (reduce net worth).
    - GFSM 2001/2014: transactions in financial assets are considered investments (do not change net worth).

- Non-autonomous social insurance (pension) gap:
  - Statistics unavailable but mission estimates derived from net differences between social security contributions and social benefits from MoFED out-turn data for 2015–2017.
  - Figure 5 displays mission estimates of the imputed non-autonomous pension gap (social contributions and social benefits in Mn USD for 2015–2017).

### Achievements and challenges (overview)
- Achievements:
  - MoFED produces modified GFSM 1986 out-turn bulletins.
  - Institutional identification coverage sufficient to identify general government units centrally.

- Challenges:
  - Lack of centralized, standardized financial reporting across subsectors (EBUs, local governments, NSSA integration).
  - Non-compliance with ZPFMA09 reporting requirements across many ministries and subsectors.
  - Treatment differences between GFSM 1986 and GFSM 2001/2014 leading to discrepancies in net lending/borrowing and revenue/expenditure aggregates.
  - Missing consolidated EBU financial statements within MoFED.
  - Non-autonomous pension scheme data unavailable but estimable only from net differences in MoFED out-turn data.

### COA development and immediate needs
- The COA was developed by the Public Finance Management Unit using the flexible SAP system and is described as "an excellent achievement for the MoFED."
- Authorities would benefit from a technical assistance mission to ensure the finalized system can easily comply with international standards.
- The COA must be integrated with a standardized reporting template that is flexible enough for all subsectors of the general government and integrated into the SAP system.

### Rollout requirements and institutional coordination
- Rolling out the new COA into other subsectors of the general government requires compliance with the legal framework set out in the ZPFMA09.
- Successful rollout will require a higher degree of cooperation and communication between all subsectors of the general government.

### Institutional coverage of public corporations
- MoFED has relatively accurate records of institutional units for public sector corporations; identification is relatively comprehensive within MoFED though discrepancies across agencies exist.
- Reported variations in counts:
  - SERA lists 107 public corporations with 32 subsidiaries.
  - A 2016 IMF mission found around 70 nonfinancial public-sector corporations (along with 145 EBU funds).
  - Another government source lists approximately 63 parastatals.
  - A press statement by the Hon P.A. Chinamasa lists approximately 73 state enterprises and subsidiaries.
- Financial public corporations listed as "approximately nine": the Reserve Bank of Zimbabwe (RBZ), Agribank, Infrastructure and Development Bank of Zimbabwe, Infrastructure Development Bank, JEWEL BANK (CBZ), People's own Savings Bank, Women’s Development Bank, ZAMCO, and the Zimbabwe Reinsurance Corporation.

### Legal framework for public-sector corporation reporting (ZPFMA09)
- ZPFMA09 Part V, section 49 (1) requires the accounting authority for a public entity to:
  - a) Keep full records of the financial affairs of that public entity;
  - b) Prepare financial statements for each financial year in accordance with general accepted accounting practices;
  - c) Submit the financial statements referred to in paragraph (b) within two months after the end of the financial year to:
    - (1) The auditors of the public entity for auditing; and
    - (2) The Accountant General; and
    - (3) If it is a designated corporate body or specific public entity, to the Treasury;
  - d) Submit within five months of the end of a financial year to the Treasury, the appropriate Minister and, if the Comptroller and Auditor-General did not perform the audit of the financial statements, the Comptroller and Auditor-General:
    - (1) An annual report of the activities of that public entity during that financial year; and
    - (2) The financial statements for that financial year after the statements have been audited; and
    - (3) The report of the auditors on those statements.
- ZPFMA09 Part V, Section 49 (2) requires annual reports and financial statements to:
  - (a) Fairly represent the of the public entity, its business, its financial results, its performance against predetermined objectives and its financial position as at the end of the financial year concerned;
  - (b) Include particulars of any:
    - (i) Any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during that financial year;
    - (ii) Any criminal prosecution or disciplinary steps taken because of such losses or irregular expenditure or fruitless or wasteful expenditure;
    - (iii) Any losses recovered or written off;
    - (iv) Any financial assistance received from the State and commitments made by the State on its behalf; and
    - (v) Any other matters that may be prescribed;
  - (c) Include the financial statements of any subsidiary of the public entity.
- In practice, ZPFMA09 is "fairly well constructed, but not complied with."

### Reporting framework and current status for public corporations
- The AG's office should be able to set a standardized format based on general accepted accounting standards, but currently receives financial information for public corporations only in the form of annual reports with varying degrees of statistical information.
- Several types of non-standardized reporting forms are used by public corporations, making consolidation and monitoring by the MoFED infeasible and leaving almost all public corporations not in compliance with ZPFMA09.
- Financial reporting within the MoFED:
  - Nonfinancial public corporations: reporting limited to information contained in reports submitted by ministries; low compliance with ZPFMA09; absence of standardized reporting framework; inability to compile consolidated financial information.
  - Financial public corporations: reporting limited to information contained in reports submitted by these corporations; low compliance with ZPFMA09; inability to compile consolidated financial information in a PSDSG/GFSM 2014 framework.
- The Debt Management Unit within the MoFED has relatively accurate records of public nonfinancial corporation loan obligations and records loan obligations, including penalties, using the UNCTAD Debt Management Financial Accounting System (DMFAS).

### Achievements and challenges for public corporations
- The government has embarked on an ambitious reform program for public sector corporations that could dramatically reduce government balance sheet risk via contingent liabilities and direct fiscal impacts.
- All public corporations not privatized or restructured in the short term should be required to comply with ZPFMA09 in reporting frameworks and timelines.
- Lack of coordination and cooperation across ministries is a significant challenge to achieving comprehensive public-sector finance statistics.
- The Auditor General has produced high quality assessments with recommendations largely unfulfilled; since appointment in early 2004 the AG has produced transparent annual reports with little follow-up by ministries.

### Detailed technical recommendations (preserved)
1. The inclusion of local government statistics into the compilations and reporting framework within the Ministry of Finance and Economic Development (MoFED) as discussed in Section B.
2. The inclusion of EBUs in the compilation and reporting framework within MoFED as discussed in Section B.
3. The inclusion of public sector corporations (state owned enterprises and parastatals) in the compilation and reporting framework within MoFED as discussed in Section E.
4. The creation of full financial balance sheets for all public-sector entities (both consolidated and non-consolidated).
5. A complete review of cross-ministry compliance with the Republic of Zimbabwe Public Finance Management Act (2009) (ZPFMA09) in order to ensure full government compliance with this law.
6. The continued monitoring of contingent liabilities through the Debt Management Office in the MoFED.
7. The movement towards a modified accrual accounting system which allows for all non-cash transactions to be recorded both above and below the line to ensure accurate balancing items (net lending/borrowing) consistent with the GFSM 2014 framework.
- Implementation of all recommendations will require greater communication and cooperation between MoFED, the Ministry of Local Government, Public Works and National Housing (MLGPWNH) and other relevant ministries, along with the building and implementation of a standardized reporting template that fits into the new COA framework.

### Priority actions and milestone target completion dates (preserved)
- H Institutional sectors are defined in accordance with GFSM 2014 guidelines — June 30, 2018
- H Economic classification of revenue & expense transactions consistent with GFSM 2014. — June 30, 2018
- H GFS compiled according to the GFSM 2014 guidelines for the budgetary central government — December 31, 2018
- H functional classification of expenditure transactions follows GFSM 2014 guideline — December 31, 2019
- H classification of stocks of debt follows PSDSG 2011 guidelines — December 31, 2018
- H Generate and disseminate budgetary central government above and below the line transactions in GFSM 2014 presentation using new CoA. — December 2018
- H Design and implement standardized reporting template for all local government units based on the new CoA and compatible with SAP system. — June 2019
- H Design and implement standardized reporting template for all extrabudgetary units compatible with SPA system and integrable into GFSM 2014 framework. — June 2019
- L GFS are compiled for the general government sector and its subsectors — (no date specified)
- H Design and implement standardized reporting template for public corporations — December 2020

### Appendix highlights — Extrabudgetary Central Government and institutional lists
- Appendix II provides extensive lists of extrabudgetary institutional units, local government institutional units, nonfinancial public corporations, and officials met during the mission.
- Selected local government units listed include: Hwange, Karoi, Bindura, Harare, Ruwa, Norton, Chegutu, Bulawayo, Epworth, Shurugwi, Chinhoyi, Kadoma, Chirundu, Zvishavane, Chitungwiza, Gweru, Rusape, Gwanda, Kwekwe, Chipinge, Kariba, Masvingo, Plumtree, Marondera, Mutare, Chiredzi, Redcliff, Victoria Falls.
- Selected nonfinancial public corporations listed include: ZESA Holdings, AIR ZIMBABWE (PVT) LTD, ZIMPOST, Grain Marketing Board, National Railways of Zimbabwe, HWANGE COLLIERY COMPANY, ZISCO, TEL-ONE, Zambezi River Authority, Zimbabwe National Water Authority, Industrial Development Corporation, and multiple mining and industrial entities.
- Officials met during the mission:
  - Mr. Daniel Muchemwa (Accountant General) — Accountant General Office MoFED
  - Ms. Mildred Chiri (Auditor General) — Auditor General Office MoFED
  - Mr. Edgar Nyoni (Executive Director) — SERA
  - Mr. Itayi Bangidza — Accountant General Office MoFED
  - Mr. Moses Tomu — Accountant General Office MoFED
  - Mr. Henry Dutiro — Debt Management Office MoFED
  - Mr. Tatenda Mandeya — MLGPWNH

*Source: 1zweea2019002 - 1. Institutional Coverage of the General Government in Zimbabwe (IMF mission report).*

### 1.     Institutional Coverage of the General Government in Zimbabwe ______________________________ 5

### 1.     Institutional Coverage of the General Government in Zimbabwe ______________________________ 5

### Summary of mission outcomes and priority recommendations
- Mission conducted in Harare, Zimbabwe during April 16–27, 2018.
- Authorities are making some progress toward higher quality and more comprehensive GFS, but sufficient information for meaningful monitoring and surveillance of the public sector is a long-term goal with several remaining challenges.
- Recommended actions (high-level):
  - Chart of Accounts (COA) technical assistance follow up mission to review the COA built using the SAP system.
  - Inclusion of local government statistics into the MoFED compilation and reporting framework; requires communication between MoFED and MLGPWNH and a standardized reporting template fitting the new COA.
  - Inclusion of extrabudgetary (EBU) units in MoFED’s compilation and reporting framework; requires communication between MoFED and relevant Ministries and a standardized reporting template fitting the new COA.
  - Inclusion of public corporations (state owned enterprises and parastatals) in MoFED’s compilation and reporting framework; requires communication between MoFED and relevant Ministries and a standardized reporting template fitting the new COA.
  - Movement towards a modified accrual accounting system recording all non-cash transactions both above and below the line to ensure accurate balancing items consistent with GFSM 2014.
  - Creation of full financial balance sheets for all public-sector entities (both consolidated and non-consolidated).
  - Continued monitoring of contingent liabilities through the Debt Management Office in the MoFED.
  - Review of cross-ministry compliance with the Republic of Zimbabwe Public Finance Management Act (2009) (ZPFMA09) to ensure full government compliance.

- Table 1. Priority Recommendations (dates, recommendations, responsible institutions):
  - December 2018 — Complete Chart of Accounts and generate financial reports for Budgetary Central Government. — MoFED (Accountant General)
  - June 2019 — Roll out new COA to Local government using SAP system. — MoFED and MLGPWNH
  - December 2019 — Roll out new COA to all other general government subsectors using SAP system. — MoFED and other relevant Ministries
  - June 2020 — Roll out new COA to public sector corporations using SAP system. — MoFED and other relevant Ministries

### A. Institutional coverage and subsector counts
- General observation: identification of general government institutional units in Zimbabwe is relatively comprehensive within the MoFED; sufficient information exists centrally to identify all general government units.
- Challenges: significant gaps in centralized and standardized financial information (see Section B).

- Budgetary Central Government:
  - Consists of around forty-five institutional units.
  - Several units are classified across a range of ministerial portfolios with varying degrees of compliance with the ZPFMA09.
  - The AG’s office currently receives sufficient information to produce a consolidated financial statement for the budgetary central government only.

- Non-autonomous social insurance scheme:
  - Exists for public sector employees. Financial data unavailable but can be estimated from available data (see Section B).

- Extrabudgetary Central Government (EBU):
  - Consists of around one hundred and forty-five institutional units.
  - Generally classified under ‘State Owned Enterprises’ and/or ‘Parastatals’ across ministerial portfolios with extremely limited degrees of compliance with the ZPFMA09.

- Local Government:
  - Consists of five local boards, twelve town councils, eight municipalities, sixty rural district councils, and seven city councils.
  - Power and autonomy have significantly increased; centrally influenced by MLGPWNH which can appoint and/or remove local officials.

- Social Security Funds:
  - One autonomous social security fund controlled by the general government: The National Social Security Authority (NSSA).
  - NSSA has a great deal of readily available financial information, but this is not integrated with budgetary central government statistics through the SAP system.

- Recommended action:
  - Authorities should maintain and update accurate records of general government institutional units. An institutional table comprising all general government institutional units should be updated regularly and disseminated publicly.

### B. Legal framework and reporting status
- Legal framework:
  - Zimbabwe Public Finance Management Act, 2009 (ZPFMA09) is fairly well constructed but not complied with; degree of compliance is very limited as noted in the most recent Auditor General Annual Report.
  - ZPFMA09 Part I, Section 3 objective: “The object of this Act is to secure transparency, accountability and sound management of the revenues, expenditure assets and liabilities of any entity specified in section 4(1).”
  - ZPFMA09 Part IV, Section 32 requires: “(1) Every director of finance shall prepare or cause to be prepared the annual [quarterly/monthly] financial statements of the Ministry concerned and shall submit such statements to the accounting officer in that Ministry and to the Accountant General within thirty days of the year concerned.”
  - ZPFMA09 Part IV, Section 36 requires monthly/quarterly/annual financial statements to state and compare actual revenue and actual expenditure (distinguishing capital and recurrent) with budgeted amounts; subsection (2) allows the Accountant General to determine format and additional details of statements.

- Reporting status:
  - Zimbabwe has not reported GFS data for any subsector of the general government to the IMF’s Statistics Department since 2009.
  - MoFED is producing monthly/quarterly/annual out-turn bulletins based on a modified GFSM 1986 presentation.
  - Mission created GFSM 1986 to GFSM2001/14 bridge tables for the years 2015–2017 using MoFED out-turn data.

- Net lending/borrowing (budgetary central government) — table of values from Figure 3:
  - Net Lending/Year
    - 2015: MoFED Outturn -0.13; Mission Conversion -0.98; WEO -0.99
    - 2016: MoFED Outturn -1.42; Mission Conversion -1.35; WEO -1.36
    - 2017: MoFED Outturn -2.70; Mission Conversion -2.22; WEO -1.67
    - 2018: MoFED Outturn (n/a); Mission Conversion (n/a); WEO -0.61*  (*est)

- Budgetary central government revenue and expenditure:
  - Figures 4(a) and 4(b) show discrepancies between MoFED out-turn, mission conversion, and WEO data for 2015–2018 (graphic data referenced).
  - Majority of differences stem from the treatment of transactions in financial assets:
    - GFSM 1986: transactions in financial assets are considered government expenditures (reduce net worth).
    - GFSM 2001/2014: transactions in financial assets are considered investments (do not change net worth).

- Non-autonomous social insurance (pension) gap:
  - Statistics unavailable but mission estimates derived from net differences between social security contributions and social benefits from MoFED out-turn data for 2015–2017.
  - Figure 5 displays mission estimates of the imputed non-autonomous pension gap (social contributions and social benefits in Mn USD for 2015–2017).

- Extrabudgetary Central Government:
  - Consolidated financial statements for EBU funds are not available within MoFED.
  - Ministries supply financial information for EBUs with varying degrees and templates; not compliant with ZPFMA09.

- Local Government:
  - Report financial information to MoFED with varying templates and poor overall reporting to the AG’s office.
  - Some local units are working on a new reporting framework with GIZ assistance but no standardized framework compatible with SAP exists; not compliant with ZPFMA09.

- Social Security Funds:
  - NSSA financial information is publicly available but not produced using a standardized reporting format or system (SAP); therefore NSSA statistics are not consolidated with other general government finance statistics.

- Recommended action:
  - Review compliance with ZPFMA09 across general government subsectors, including all local government units, EBU funds and social security funds.
  - The AG should impose a standardized method of accounting and reporting template based on best practice international standards across all subsectors of the general government (as set out in subsection (2) of Section 36 in ZPFMA09).
  - Integrate the standardized methodology and content into the SAP system via the newly developed COA.

### C. Achievements and challenges (overview)
- Achievement: MoFED produces modified GFSM 1986 out-turn bulletins and has institutional identification coverage sufficient to identify general government units centrally.
- Challenges:
  - Lack of centralized, standardized financial reporting across subsectors (EBUs, local governments, NSSA integration).
  - Non-compliance with ZPFMA09 reporting requirements across many ministries and subsectors.
  - Treatment differences between GFSM 1986 and GFSM 2001/2014 lead to discrepancies in net lending/borrowing and revenue/expenditure aggregates.
  - Missing consolidated EBU financial statements within MoFED.
  - Non-autonomous pension scheme data unavailable but estimable only from net differences in MoFED out-turn data.

*Source: 1zweea2019002 - 1.     Institutional Coverage of the General Government in Zimbabwe (IMF mission report).*

### 25. The MoFED is nearing completion of a new Chart of Accounts (COA) which has been

### 25. The MoFED is nearing completion of a new Chart of Accounts (COA) which has been

### COA development and immediate needs
- The COA was developed by the Public Finance Management Unit using the flexible SAP system and is described as "an excellent achievement for the MoFED."
- The authorities would benefit from a technical assistance mission to ensure the finalized system can easily comply with international standards.
- The COA must be integrated with a standardized reporting template that is flexible enough for all subsectors of the general government and integrated into the SAP system.

### Rollout requirements and institutional coordination
- Rolling out the new COA into other subsectors of the general government requires compliance with the legal framework set out in the ZPFMA09.
- Successful rollout will require a higher degree of cooperation and communication between all subsectors of the general government.

### Institutional coverage of public corporations
- The government has relatively accurate records of institutional units for public sector corporations within the MoFED.
- Identification of public corporation institutional units is relatively comprehensive within the MoFED, though discrepancies across agencies exist and can be rectified with greater communication between relevant ministries and the MoFED.
- Variations in counts reported by different sources:
  - SERA lists 107 public corporations with 32 subsidiaries.
  - A 2016 IMF mission found around 70 nonfinancial public-sector corporations (along with 145 EBU funds).
  - Another government source lists approximately 63 parastatals.
  - A press statement by the Hon P.A. Chinamasa lists approximately 73 state enterprises and subsidiaries.
- Financial public corporations: "approximately nine" financial public corporations are listed: the Reserve Bank of Zimbabwe (RBZ), Agribank, Infrastructure and Development Bank of Zimbabwe, Infrastructure Development Bank, JEWEL BANK (CBZ), People's own Savings Bank, Women’s Development Bank, ZAMCO, and the Zimbabwe Reinsurance Corporation.

### Legal framework for public-sector corporation reporting (ZPFMA09)
- ZPFMA09 Part V, section 49 (1) requires the accounting authority for a public entity to:
  a) Keep full records of the financial affairs of that public entity;
  b) Prepare financial statements for each financial year in accordance with general accepted accounting practices;
  c) Submit the financial statements referred to in paragraph (b) within two months after the end of the financial year to:
     (1) The auditors of the public entity for auditing; and
     (2) The Accountant General; and
     (3) If it is a designated corporate body or specific public entity, to the Treasury;
  d) Submit within five months of the end of a financial year to the Treasury, the appropriate Minister and, if the Comptroller and Auditor-General did not perform the audit of the financial statements, the Comptroller and Auditor-General:
     (1) An annual report of the activities of that public entity during that financial year; and
     (2) The financial statements for that financial year after the statements have been audited; and
     (3) The report of the auditors on those statements.
- ZPFMA09 Part V, Section 49 (2) requires annual reports and financial statements to:
  (a) Fairly represent the of the public entity, its business, its financial results, its performance against predetermined objectives and its financial position as at the end of the financial year concerned;
  (b) Include particulars of any:
     (i) Any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during that financial year;
     (ii) Any criminal prosecution or disciplinary steps taken because of such losses or irregular expenditure or fruitless or wasteful expenditure;
     (iii) Any losses recovered or written off;
     (iv) Any financial assistance received from the State and commitments made by the State on its behalf; and
     (v) Any other matters that may be prescribed;
  (c) Include the financial statements of any subsidiary of the public entity.
- In practice, ZPFMA09 is "fairly well constructed, but not complied with."

### Reporting framework and current status
- The AG's office should be able to set a standardized format based on general accepted accounting standards, but currently receives financial information for public corporations only in the form of annual reports with varying degrees of statistical information.
- Several types of non-standardized reporting forms are used by public corporations, making consolidation and monitoring by the MoFED infeasible and leaving almost all public corporations not in compliance with ZPFMA09.
- Financial reporting within the MoFED:
  - Nonfinancial public corporations: reporting limited to information contained in reports submitted by ministries; low compliance with ZPFMA09; absence of standardized reporting framework; inability to compile consolidated financial information.
  - Financial public corporations: reporting limited to information contained in reports submitted by these corporations; low compliance with ZPFMA09; inability to compile consolidated financial information in a PSDSG/GFSM 2014 framework.
- The Debt Management Unit within the MoFED has relatively accurate records of public nonfinancial corporation loan obligations and records loan obligations, including penalties, using the UNCTAD Debt Management Financial Accounting System (DMFAS).

### Achievements and challenges for public corporations
- The government has embarked on an ambitious reform program for public sector corporations that could dramatically reduce government balance sheet risk via contingent liabilities and direct fiscal impacts.
- All public corporations not privatized or restructured in the short term should be required to comply with ZPFMA09 in reporting frameworks and timelines.
- Lack of coordination and cooperation across ministries is a significant challenge to achieving comprehensive public-sector finance statistics.
- The Auditor General has produced high quality assessments with recommendations largely unfulfilled; since appointment in early 2004 the AG has produced transparent annual reports with little follow-up by ministries.

### Recommended actions (excerpted and preserved)
- Continue to build accurate and centralized records of public sector institutional units, including separating EBU funds from public corporations and continually monitoring changes as the government enters a period of reform.
- Review compliance with ZPFMA09 across all public-sector corporations including all financial and nonfinancial corporations; this requires greater cooperation and communication between ministries.
- The AG should be able to impose a standardized method of accounting and reporting template based on best practice international standards across all subsectors of the general government.
- Integrate the standardized methodology and content into the SAP system via an integral reporting template which is both IFRS and PSDSG compliant.
- Design and implement a standardized reporting framework to incorporate public corporations into the SAP system; ensure compliance with ZPFMA09; develop a standardized reporting template by the AG's office flexible enough for all public corporations to be compliant with IFRS and PSDSG and integrated into SAP.
- The Debt Management Office in the MoFED should continue monitoring contingent liabilities.

### Detailed technical recommendations (listed)
1. The inclusion of local government statistics into the compilations and reporting framework within the Ministry of Finance and Economic Development (MoFED) as discussed in Section B.
2. The inclusion of EBUs in the compilation and reporting framework within MoFED as discussed in Section B.
3. The inclusion of public sector corporations (state owned enterprises and parastatals) in the compilation and reporting framework within MoFED as discussed in Section E.
4. The creation of full financial balance sheets for all public-sector entities (both consolidated and non-consolidated).
5. A complete review of cross-ministry compliance with the Republic of Zimbabwe Public Finance Management Act (2009) (ZPFMA09) in order to ensure full government compliance with this law.
6. The continued monitoring of contingent liabilities through the Debt Management Office in the MoFED.
7. The movement towards a modified accrual accounting system which allows for all non-cash transactions to be recorded both above and below the line to ensure accurate balancing items (net lending/borrowing) consistent with the GFSM 2014 framework.
- Implementation of all recommendations will require greater communication and cooperation between MoFED, the Ministry of Local Government, Public Works and National Housing (MLGPWNH) and other relevant ministries, along with the building and implementation of a standardized reporting template that fits into the new COA framework.

### Priority actions and milestone target completion dates (preserved)
- H Institutional sectors are defined in accordance with GFSM 2014 guidelines — June 30, 2018
- H Economic classification of revenue & expense transactions consistent with GFSM 2014. — June 30, 2018
- H GFS compiled according to the GFSM 2014 guidelines for the budgetary central government — December 31, 2018
- H functional classification of expenditure transactions follows GFSM 2014 guideline — December 31, 2019
- H classification of stocks of debt follows PSDSG 2011 guidelines — December 31, 2018
- H Generate and disseminate budgetary central government above and below the line transactions in GFSM 2014 presentation using new CoA. — December 2018
- H Design and implement standardized reporting template for all local government units based on the new CoA and compatible with SAP system. — June 2019
- H Design and implement standardized reporting template for all extrabudgetary units compatible with SPA system and integrable into GFSM 2014 framework. — June 2019
- L GFS are compiled for the general government sector and its subsectors — (no date specified)
- H Design and implement standardized reporting template for public corporations — December 2020

*Source: 1zweea2019002 - 25. The MoFED is nearing completion of a new Chart of Accounts (COA) which has been*

### Appendix II. Extrabudgetary Central Government

### Appendix II. Extrabudgetary Central Government

### Institutional Units (Continued)
- Competition and  
- Tariff Commission
- Medicine Control 
- Authority of 
- Zimbabwe
- Scientific and 
- Industrial Research 
- cooperation
- Zimbabwe National 
- Roads Authority
- Consumer Council of 
- Zimbabwe
- Midland State 
- University
- Securities 
- Commission
- Zimbabwe National 
- Wrestling Control 
- Board
- Council of Legal 
- Education
- Mining Industry Loan 
- Fund
- Small Enterprise 
- Development 
- Corporation SEDCO
- Zimbabwe Olympic 
- Committee
- Courts and 
- Administration Fund
- National Aids Council 
- of Zimbabwe
- Social Amenities 
- Fund
- Zimbabwe Open 
- University
- Deeds and 
- Companies Office 
- Fund
- National Archives of 
- Zimbabwe
- Sovereign Wealth 
- Fund
- Zimbabwe Revenue 
- Authority
- Defense Procurement 
- Fund
- National Arts Council 
- of Zimbabwe
- Special Gold Unit 
- Fund
- Zimbabwe School 
- Examination Council
- District Development 
- Fund
- NATIONAL ARTS 
- GALLERY
- Special Services Zimbabwe School of 
- Mines
- Drug Information and 
- Poisons Advice 
- Centre
- National Blood 
- Transfusion Services
- Sports and 
- Recreation 
- Commission
- Zimbabwe Schools 
- Examination Council
- Employment Creation 
- Fund
- National 
- Coordinating Unit
- Stadia Revolving 
- Fund
- Zimbabwe Tourism 
- Authority
- Engineering Council National Economic 
- Consultative Forum
- Standard 
- Development Fund
- Zimhabitat
- Environment 
- Management Agency
- National Economic 
- Inspectorate Conduct
- State Enterprise 
- Restructuring Agency
- ZIMSTAT
- Farmer Development 
- Trust
- National Education 
- and Training Fund
- State Enterprises and 
- Parastatals
- ZIMTRADE
- Finealt National Gallery of 
- Zimbabwe
- State Procurement 
- Board
- ZPS Revolving Fund
- Food and Nutrition 
- Council
- National Housing 
- Fund
- TARIFFS AND 
- COMPETITION 
- COMMISSSION
- ZRP Revolving Fund
- Food Standards and 
- Advisory Board
- National Housing 
- Guarantee Fund
- Technology 
- Information Pilot 
- System
- Forestry Commission  National Income and 
- Pricing Commission
- Tobacco Industry 
- Marketing Board
- Freedom from 
- Hunger Campaign
- National 
- Indigenization and 
- Economic 
- Empowerment
- Tobacco Research 
- Board

### Institutional Units (End)
- Government Pool 
- Property Fund
- National Investment 
- Trust
- Trade Measures Fund  
- Great Zimbabwe 
- University
- NATIONAL LIBRARY 
- AND 
- DOCUMENTATION 
- SERVICE
- Traditional Healers 
- Councils
- Guardian Fund National Museums 
- and Monuments
- Traffic and Legislation 
- Fund
- Gwanda University National Parks and 
- Wildlife Management 
- Authority
- Traffic Safety Board  
- Harare Institute of 
- Technology
- National University of 
- Science and 
- Technology
- TRAFFIC SAFETY 
- COUNCIL OF 
- ZIMBABWE
- Health Profession 
- Council
- National Youth 
- Council
- Training Loan Fund  
- Health Service Board National Youth 
- Development and 
- employment creation 
- fund
- Transmedia  
- Health services fund National Youth 
- Service
- Transport Purchase 
- Fund

### Local Government Institutional Units
- Local Board Town Council Municipal 
- Councils
- City Councils
- Hwange Karoi Bindura Harare
- Ruwa Norton Chegutu Bulawayo
- Epworth Shurugwi Chinhoyi Kadoma
- Chirundu Zvishavane Chitungwiza Gweru
- Rusape Gwanda Kwekwe
- Chipinge Kariba Masvingo
- Plumtree Marondera Mutare
- Chiredzi Masvingo
- Redcliff
- Victoria Falls

### Nonfinancial Public Corporations
- Jena Mine ZARNET
- Agricultural Rural Development 
- Authority
- Kwekwe Roasting Plant ZESA Holdings
- AIR ZIMBABWE (PVT) LTD Marlin Granite Mozambique 
- Ltd
- Zimbabwe Allied Timber Ltd
- Allied Timber Pvt. Ltd. Mineral Marketing Corporation 
- of Zimbabwe
- Zimbabwe Broadcasting Holdings
- Alumin Metal Industries Ltd Motec Holdings ZIMBABWE DEFENCE INDUSTRY 
- (ZDI)
- Amtec Motos - Trading 
- Division
- National Furniture Industries 
- (Pvt) Ltd
- Zimbabwe Development 
- Corporation
- Autologistics Services National Oil Infrastructure 
- Company of Zimbabwe
- Zimbabwe Electricity Transmission 
- and Distribution Company
- Bonnezim (Pvt) Ltd National Pharmaceuticals 
- Company
- Zimbabwe Fertliser Company
- Chegutu Stone National Railways of Zimbabwe Zimbabwe Glass Industries Ltd
- Chemplex Corporation Ltd NET-ONE Zimbabwe Grain Bag (Pvt) Ltd
- Civil Aviation Authority of 
- Zimbabwe
- OLIVINE INDUSTRIES ZIMBABWE IRON AND STEEL 
- COMPANY (ZISCO)
- Cold Storage Company Petro Trade Zimbabwe Mass media 
- Corridor Developments (Pvt) 
- Limited
- Printflow Zimbabwe Mining Development 
- Corporation
- Deven Engineering Rainbow Tourism Group Zimbabwe National Water 
- Authority
- Dimension Stone Quarries (Pvt) 
- Ltd
- Road Motor Services Zimbabwe Newspaper 
- Dorowa Minerals (Pvt) Ltd ROASTING PLANT- KWEKWE Zimbabwe Phosphate Industries
- Elvington Mine Pvt. Ltd. Rushinga Dolomite Zimbabwe United Passenger 
- Company
- FINHOLD Sabi Gold Mine Pvt. Ltd. Zimchem Refiners (Pvt) Ltd
- G & W Industrial Minerals (Pvt) 
- Ltd
- Sunway City Harare (Pvt) Ltd ZIMPOST
- G. D. Haulage (Pvt) Ltd Technical and Industrial 
- Investments
- ZISCO
- Grain Marketing Board TEL-ONE ZITF
- HWANGE COLLIERY COMPANY Wankie Colliery Company Zambezi River Authority
- Industrial Development 
- Corporation
- Willowvale Mazda Motor 
- Industries
- Invesys Investments (Pvt) Ltd t/a 
- IDC Agrotech Industrial Holdings
- Industrial Sands (Pvt) Ltd Willowvale Processing Unit

### Officials Met During the Mission
- Mr. Daniel Muchemwa 
  - (Accountant General)
  - Accountant General Office MoFED
- Ms. Mildred Chiri 
  - (Auditor General)
  - Auditor General Office  
  - MoFED
- Mr. Edgar Nyoni 
  - (Executive Director)
  - SERA
- Mr. Itayi Bangidza
  - Accountant General Office 
  - MoFED
- Mr. Moses Tomu
  - Accountant General Office 
  - MoFED
- Mr. Henry Dutiro
  - Debt Management Office 
  - MoFED
- Mr. Tatenda Mandeya MLGPWNH

*Source: Appendix II–V, "Extrabudgetary Central Government," from the provided IMF content unit.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2019/1zweea2019002.pdf_