Zimbabwe’s domestic debt has risen by over 1400 percent from $442 million to $6.3 billion in the last five years with the government’s move to resort to issuance of treasury bills creating a fiscal imbalance that is threatening macro-economic stability,policy and economic analyst Butler Tambo has said.
Speaking at the ‘Wither Zimbabwe After Inauguration –A new Era or Posturing’ workshop in the capital today, policy and economic analyst Butler Tambo said the current trend on the issuance of the treasury bills has reached a worrying stage as interests continue to accrue albeit with no signs that the interests will be paid.
“The current trend and manner of issuance of treasury bills is unsustainable, and ahs not only led to mounting interest payment obligations, but now threatens macro-economic instability.
“For instance, in the last five years (2013-2018), domestic debt has arisen by over 1400 percent from $442 million to $6.3 billion- the fastest in the history of the country. Unrestrained issuance of Treasury Bills has widened the gap between value of virtual money (RTGs) and available United States dollars,” said Tambo.
He added that government programs such as the Command Agriculture, Command Mining and the 30 July elections drained the fiscal leaving banks with burden to anchor government debt while grounding the industry to its knees.
“The biggest takers of the Treasury Bills are banks who have now been left exposed to potential debt of government since it has limited resources. This therefore means that government has been crowding out the private sector from borrowing the limited resources found in the markets and this has made the already tottering industry to all but ground to a halt.”
Tambo further lashed into the Reserve Bank of Zimbabwe (RBZ) describing its intention to clear debt arrears in the next six months as ‘fictitious’ and ‘outright lies’ saying the government has failed to meet the 2015 Lima agreement therefore cannot be trusted in its promises.
“Talk by the RBZ that the US $1.8 Billion debt arrears will be cleared in six months is fictitious if not outright lies because the country has failed to honour the 2015 Lima, Peru agreement to clear debt arrears and only managed to pay US $110 million to the IMF leaving paying our all weather friends China, the World Bank and African Development Bank,” he added.
Zanu PF Youth League representative Tafadzwa Mugwadi said clearing debts to the international financial institutions is not a priority for the government saying the state of the economy does not permit to do so.
“I will certainly say and vividly say that the payment of debt is not a priority in this moment because our economy needs to be taken to another level. The state of our economy right now is not real so good that would allow us to exit certain amounts of fiscals to the payment of debts.”
Meanwhile, MDC Youth Secretary General Lovemore Chinoputsa said in order for the country to move forward, the government has to commit to debt clearance as has been set as a prerequisite by the world financial institutions describing slacking in paying back as reckless.
“Its reckless for anyone to want to consume and not want to payback, the reality of the matter is that if we want to move as a country we need to be able to own our debt obligation there is no movement that will come as long as we have not shown commitment to be able to deal with our debt.”
