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Zimbabwe debt should be audited

by John Kachembere
24 Mar 2019 at 14:29hrs | Views
ZIMBABWE should not rush to pay its external debts until an official audit has been done to ascertain the validity of the arrears, a local pressure group has said.

The southern African country is reeling from a US$18 billion debt, with nearly US$9 billion being owed to external creditors, and government has committed to repay some of the loans to international lenders by the end of this year.

However, Janet Zhou, the Zimbabwe Coalition on Debt and Development (Zimcodd) executive director, said there was need to establish the country's total debt, which dates back to pre-independence days, and the reasons for borrowing before it is cleared.

"We are calling for an official debt audit so as to come up with a true picture of the debt stock and to know who is owed and how much is owed. The audit should consider all relevant legal, political and economic factors, which have led to the accumulation of illegitimate and odious debt in this country," she said.

"The audit commission must also consider social and environmental damages to the local populations caused by debt. Debts which are found to be illegitimate must not be paid. Debts which are legitimate must be reimbursed," she said.

The latest development also comes at a time Treasury has confirmed that it is undertaking an audit to ascertain the Zimbabwean government's debt and will present the findings to Parliament soon.

Information gathered by The Daily News on Sunday shows that the country inherited at least a US$700 million debt from Rhodesia, which was accrued by the Ian Smith-led government when it was under international sanctions.

Economic analyst Francis Mukora said only US$2,5 billion of Zimbabwe's debt, which emanated from construction work at Hwange Power Station in the 1990s as well as legacy issues from the Economic Structural Adjustment Programme (ESAP), had traceable origins while the rest is odious.

Odious debts are defined as those debts incurred by the state which are not for the needs or interest of the state but merely to strengthen the state's despotic power as well as to repress the population that fights against despotism.

"This money will be repaid by Zimbabwean citizens one way or another unless it is somehow written off. Basically, we and our children will pay it. If we have to pay back the loan with interest surely we ought to know why we are paying it and we ought to know what the terms of agreement for these loans were," he said.
Mukora also indicated that there was also need to know the terms under which these loans were taken.

"If the money was not used for the purposes it was taken or if it was privatised, it must be recovered and used to pay back the debt. Only money that was genuinely taken and used for the designated purposes should be repaid by the people of Zimbabwe. It is criminal to divert such huge sums of money for whatever reason, and those seen to be doing this should be made accountable," he added.

Meanwhile, Zhou said while her organisation was prepared to campaign for a debt cancellation, Zimbabwean citizens should rise up and refuse to pay back the loans until a full accounting of what the country is paying for and how much interest is accruing on those loans is given.

"As we take stock in terms of how we have gotten to where we are in terms of the debt question, let us be aware that government violated section 300 of the Constitution, which sets limits on state borrowings, public debt and state guarantees.

"Section 61(a-b) of the Public Finance Management Act, which stipulates that the aggregate amount that may be borrowed in any financial year shall not exceed 30 percent of the general government revenue in the previous year has always been violated," she said.

Zhou noted that in 2018, government's overdraft with the central bank stood at US$2,3 billion against the statutory limit of US$762,8 million as set by the Reserve Bank of Zimbabwe Act.

Source - dailynews
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