HARARE – The Zimbabwe Coalition on Debt and Development (ZIMCODD) has launched a debt strategy resolution paper called Sustainable and Inclusive Debt Management Framework for Zimbabwe (SIDMaF) aimed at weaning the southern African nation from the debt trap.
Landlocked Zimbabwe has a national debt stock of close to USD18 billion comprising both the domestic and external debt, which is nearly 114% of the Gross Domestic Product (GDP) – monetary value placed on goods and services produced by the country, according to ZIMCODD. In spite of this, government has continued to seek new lines of credit from multilateral lenders without clearing existing arrears.
According to official statistics, the debt is a result of a combination of factors spanning from inherited colonial debt; perennial budget deficits, fiscal indiscipline and corruption.
ZIMCODD executive director Janet Zhou said a sustainable and inclusive debt strategy that harnesses efforts and aspirations of the people of Zimbabwe was the way forward.
“Today the Zimbabwe Coalition on Debt and Development met with different stakeholders from government departments, donor community, academia, parliament, civil society organisations, economists and social scientists from various sectors and launched a debt strategy resolution paper entitled SIDMaF,” she said.
The Zimbabwe government created an Aid and debt Management Office which is due to start reconciling debt figures with creditors. The southern African nation is carrying out accelerated engagements efforts with the multilateral lenders in a bid to secure fresh funding to solve the economic woes.
“This paper was compiled following extensive research and wide consultations, SIDMaF proffers a hybrid model which calls for combined efforts among stakeholders towards addressing Zimbabwe’s debt overhang. SIDMaF is coming in to augment government efforts towards resolving the debt crisis whose implications on the economy are appalling.”
For the last decade, the country has been in default on most of its debt owed to the rest of the world, currently estimated at US$7 billion. However, in 2016, the southern African country cleared its 15 years debt arrears owed to the International Monetary Fund (IMF) worth US$107.9 million. In February this year, the treasury revealed that it is carrying out an audit to ascertain the extent of the country’s debt.
SIDMaF will focus on the country coming up with a comprehensive debt audit, cancellation of odious and illegitimate, settling legitimate debt and debt sustainability plan.
ZIMCODD said transparency, participation and accountability are important principles that should inform the lending and borrowing decisions in Zimbabwe. The government must guarantee full disclosure of all relevant information regarding loan agreements, debt repayments, debt management, outcomes of public debt audits and other related matters. Also respect of the Constitution is important across the budget cycle and should start at the loan contraction stage to ensure that the debt is acquired in accordance with the law.
Most importantly, there should be sufficient political will to effectively enforce the laws governing public finance management, Zhou added.