Zimbabwe GDP stands at US$20bn, says Imara

IMARA Asset Management has estimated the size of the Zimbabwean economy to be at US$20 billion, a figure which is a third shy of government projections, as the local economy continues to function under a dual pricing system.

Experts say estimating the actual size of the economy in United States dollars is equally hard, given the current currency dynamics.

The government's own numbers put the Gross Domestic Product at ZW$3 000 billion which at the auction rate is roughly US$30 billion, but at the parallel rate would be US$15 billion.

"This latter number is more in tune with the Annual Debt Bulletin 2020, where the US dollar estimate was put at US$14.7 billion in that year," Imara said in a research note titled Zimbabwe Investment Notes January 2022.

"By comparison, Zambia's economy, using IMF data, suggests their economy is US$23 billion. US$15 billion for Zimbabwe looks low, but US$30 billion looks way too high. Including the informal economy, a number somewhere between US$15 billion and US$20 billion is probably closer to the mark. This is especially the case with increasing dollarisation within the economy, driven by both the private and public sectors."

 Parliament, the report further advises, should play an oversight role in capping the country's external debt, which has ballooned over the last five years.

With no budgetary support, Zimbabwe has been relying on domestic resources, loans from China and lenders such as the African Export and Import Bank to finance some of its critical projects. According to the government, external debt stood at a whopping US$13.2 billion.

At the time of the 2016 Lima Agreement on external debt, Zimbabwe had US$6.8 billion on its books (2015 numbers).

"That number has now expanded by nearly US$7 billion in just five years which for a country that suggests that it is under international sanctions should be seen as a serious increase," Imara says.

"These are very large numbers and should have received in-depth scrutiny by Parliament in our view as to where all that money ended up. What is to stop something similar happening in 2022 on the eve of an election?"

Of that US$13.2 billion, US$4.9 billion can be accounted for by the RBZ's own actions, its liabilities have been taken over by government. US$3.3 billion of the US$4.9 billion are blocked funds or the so-called legacy debt going back to the introduction of the Zimdollar in 2019. US$1.45 billion are loans that the RBZ guaranteed of which a part is assumed to be related to agricultural loans.

There is much discussion across Africa as to the extent of Chinese loans to various African governments, which in a number of cases put such countries in precarious debt positions.

In Zimbabwe, according to the Public Debt Bulletin 2020, Chinese debts appear under Non-Paris Club bilateral debt, which totalled US$1.66 billion.

"In 2020 we note that China received 84% of the total token debt-service payments that Zimbabwe made. Such is the Chinese loan problem in Africa that President Xi stated back in November that over the next three years China would cut the headline amount of money it supplies to Africa by one third to US$40 billion and that it would redirect money away from large infrastructure projects," the report reads.