Treasury Rejects Taking Over CAAZ Debts, Cites Budget Strain

Harare International Airport runway and control tower

The Ministry of Finance, Economic Development, and Investment Promotion has rejected a recommendation by Parliament’s Public Accounts Committee (PAC) for the State to assume legacy debts owed by the Civil Aviation Authority of Zimbabwe (CAAZ), warning that such a move would strain the national budget and undermine funding for essential public services.

In written submissions to Parliament, Finance Minister Mthuli Ncube said Treasury lacks the fiscal space to absorb or directly service the aviation regulator’s liabilities, stressing that debt management must follow established frameworks rather than ad hoc transfers.

“The principle of fiscal prudence requires that debt management remain aligned with established mechanisms,” Ncube said, adding that taking on CAAZ’s obligations would compromise national development priorities.

Mounting Debt Pressures at CAAZ

CAAZ has been under sustained financial pressure, with its current liabilities exceeding current assets, an indicator of working capital deficiency and difficulty meeting short-term obligations. According to the PAC, the authority failed to service overdue legacy long-term loans amounting to ZWL18,59 billion, alongside domestic loans of ZWL111 million for the year ended December 31, 2020.

The committee warned that operations at the aviation regulator were under threat, citing a “going concern” risk stemming from legacy loans that were not transferred during the unbundling of CAAZ into a regulator and the Airports Company of Zimbabwe (ACZ), which manages airports.

PAC further noted that the failure to properly align assets and liabilities during the unbundling process raised questions about the financial and accounting oversight of CAAZ’s accounting officers.

Parliament Pushes for State Intervention

In its report, the PAC urged CAAZ to engage its parent ministry to facilitate the transfer of legacy loans to ACZ. It went further, recommending that the Treasury consider taking over the debts to stabilise the regulator and safeguard its long-term sustainability.

Efforts are reportedly underway to transfer US$48 million in legacy obligations to government an outcome which, if achieved, could resolve the authority’s going concern challenges, according to the committee.

Treasury: CAAZ Has Sufficient Revenue Streams

Treasury, however, maintains that the unbundling process deliberately ensured CAAZ retained viable revenue streams to meet its obligations. Under the current arrangement, CAAZ collects airspace fees directly, while ACZ is responsible for landing fees and passenger service charges. Crucially, CAAZ also receives 32% of the revenue collected from landing fees and passenger taxes by ACZ.

“These arrangements provide CAAZ with sufficient revenue streams to meet its debt obligations,” Ncube said, emphasising that the restructuring was designed to avoid burdening the fiscus while ensuring sustainable debt servicing by both entities.

The standoff underscores broader tensions around parastatal debt, aviation infrastructure funding, and fiscal discipline issues explored in our ongoing coverage of Zimbabwe’s aviation challenges and public enterprise reforms.

CAAZ legacy debts