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Zimbabwe needs to manage her debts

by Zimcodd
03 Jun 2023 at 08:19hrs | Views
DEBT plays an important role in the resource mobilisation strategy of any country.

However, the processes of its contraction, sources, structure and its implications on the economy and the lives of people need to be carefully considered.

If managed unsustainably, debt can be intractable and can deprive citizens of socio-economic development, with women bearing the brunt of it.

Inequality continues to manifest in different facets of life, with the poor and vulnerable perpetually short-changed.

As with the rest of Africa, Zimbabwe is saddled with a huge debt overhang.

Already, efforts are currently being made by the Zimbabwean government to address the debt question.

These include the promulgation of the Public Debt Management Act and the Arrears Clearance Strategy to name a few.

Institutions such as the Debt Management Office, the Public Accounts Committee, Parliamentary Portfolio Committee on Budget and Finance are already established and making efforts to improve debt management.

Despite all this, debt levels have been soaring. As at end of September, Zimbabwe's total public debt (external and domestic) including Reserve Bank of Zimbabwe (RBZ) debt, was estimated at $10,97 trillion.

Of the total, external  public and publicly guaranteed debt accounts for 79,6% ($8,7 trillion), including blocked funds 13,2% ($1,5 trillion) and domestic debt representing the balance at 20% ($2,2 trillion).

The amount for the compensation of former farm owners, amounting to $2,18 trillion (US$3,5 billion), represents a significant share of domestic debt at 97%.

Undoubtedly, there is a compelling case to deal with public debt.

The Zimbabwe Coalition on Debt and Development (Zimcodd), African Forum and Network on Debt and Development and partners organised the fifth edition of the Zimbabwe Debt Conference bringing together various stakeholders drawn from government ministries, departments and agencies, oversight institutions, commissions, academia, national and regional civil society organisations deliberated and collectively noted that:

The global debt architecture is designed in a way that plunders and profits from poor African countries such as Zimbabwe to feed the pockets of the global north countries without any reparations. It is not by accident, but by design.

The International Monetary Fund's antidotes do not adequately and effectively support the narrative that places greater priority on the fulfilment of creditors' interests thereby depriving socio-economic development.

The debt problem is not peculiar to Zimbabwe. In the Sadc region, Malawi, Mozambique and Zambia are also in debt distress.

Since Zimbabwe attained its independence, the appetite for borrowing has been increasing. Failure to service the debts coupled with penalties has resulted in Zimbabwe plunging into a vicious cycle of debt.

Further, government has assumed the debts of parastatals, including the RBZ, resulting in the ballooning of the national debt stock.

Local government debt has also become unsustainable and is weighing heavily on public service delivery.

Source - newsday
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