Currency Switch Triggers Financial Chaos in Government Accounts: Auditor-General

BY Kwedu News

A transition in Zimbabwe’s official currency has exposed widespread financial mismanagement within government ministries, departments, and agencies (MDAs), the Auditor-General’s latest report has found.

The 2024 audit, tabled in Parliament this week, painted a chaotic picture of how state institutions struggled to adjust from the Zimbabwean Dollar (ZWL) to the newly introduced Zimbabwe Gold (ZiG).

The report, compiled by acting Auditor-General Rhea Kujinga, highlighted systemic lapses that resulted in repeated errors in financial reporting.

“The government of Zimbabwe changed currency from ZWL to Zimbabwe Gold (ZiG) effective April 6, 2024. The reporting currency for the 2024 financial statements was the ZiG,” the report noted.

The shift, however, was marred by inconsistent application of Treasury’s translation guidelines.

Ministries were expected to compile full-year financial statements in ZiG, converting all prior ZWL transactions accurately; this proved problematic.

“Nearly all MDAs withdrew and resubmitted financial statements during audit. Some withdrew and resubmitted more than four times.”

The report uncovered that this currency confusion was symptomatic of deeper structural weaknesses.

Although Treasury had issued guidance, several MDAs either misapplied or ignored the instructions, forcing the audit process into a prolonged cycle of revisions.

Despite being allocated a cumulative ZiG55.7 billion, the 32 MDAs under review only managed to utilise ZiG43.9 billion, representing a budget execution rate of just 79%.

This shortfall was largely blamed on Treasury’s failure to release sufficient funds on time, a situation that hampered service delivery and stalled critical projects.

“The 32 MDAs were given a total budget of ZiG55 669 686 893 and utilised ZiG43 878 983 672, which is 79% of the allocated budget. Most MDAs struggled to fully fulfil their objectives due to insufficient funding.

"The underutilisation of the budget largely stemmed from inadequate cash support by Treasury. This had a negative impact on the attainment of some programme goals and the quality-of-service delivery by the ministries and commissions,” Kujinga’s report stated.

Ironically, even as some MDAs grappled with underfunding, others benefited from additional allocations from Treasury’s unallocated reserve.

The report highlighted that ZiG14.5 billion was disbursed from the reserve, overshooting the approved ZiG9.5 billion by a staggering ZiG5 billion.

Furthermore, the audit flagged major gaps in accounting for direct payments made by Treasury on behalf of MDAs.

Of the US$1.99 billion in direct disbursements recorded in 2024, only US$1.39 billion was properly entered into MDA accounts.

This left an unexplained discrepancy of US$597 million.

Kujinga also pointed to an alarming rise in payment arrears across 39 MDAs. Outstanding obligations had ballooned to ZiG14.7 billion, US$61 million, ZAR733,000, and €214,709, with some debts lingering since 2021.

“Rising arrears are eroding future budgets and damaging government credibility,” she warned.

Another significant issue raised was the failure by MDAs to clear “open items” accounting entries that remained unresolved in financial statements.

These items, she said, complicate budget monitoring and misrepresent actual expenditure.

Treasury had issued Circular No. 1 of 2025 instructing MDAs to address the issue, but many cited challenges in execution, including technical limitations and lack of support.