Zimbabwe’s US$ 18 billion-plus public debt has come under increased spotlight in recent months since the coming into office of Finance and Economic Development Minister Mthuli Ncube whose keen interest on setting the country free, off this debt trap has never been in doubt.
By Kudzanai Gerede and Costa Nkomo
One of the key questions emerging in this discourse has been lack of clarity with regards to the circumstances around the accumulation of these debts.
Government is never open to discuss how these debts accrued over the years yet it is the tax payer who has to cover the cost of servicing the same debts.
Recently, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya shocked the Parliamentary Portfolio Committee on Public Accounts when he revealed that the Apex bank had borrowed US$ 985 million from various external financiers in the past year.
Zimbabwe Coalition on Debt and Development (ZIMCODD) is one of several pressure groups that have heightened calls for a debt audit on public accounts.
Addressing journalists at a media training workshop on debt discourse recently, ZIMCODD executive director Janet Zhou called for an independent and people driven audit exercise to ascertain the debt conundrum.
“We are calling for debt audit to establish how our debt has reached such an amount in a short space of time. We would want a very open debt audit with ordinary citizens given room to contribute towards this exercise,” Zhou said.
The debt question has been largely interrogated in macro-economic lenses, while the ordinary citizenry remain unaware of the implications it bears on its day-to-day business.
The government has since 2015, went on a debt assumption spree particularly on the domestic front, borrowing from local banks to sustain its budget shortfalls and to also meet some impulsive spending.
Within the first 10 months of President Mnangagwa’s administration, government borrowed US$ 5 billion domestically.
This has led to worsening of local banks liquidity there by slowing down growth in the economy.
The effects of the debt have trickled down to the common citizenry in several ways.
Firstly, to raise reserves for repayment of debts the finance minister Ncube’s first task in office was to rebase the economy and this was mischievously done to create space for tax increases, thus the two percent intermediary electronic transaction tax per every dollar has been passed down to the common men.
Rebasing the economy to US$ 28 billion from US$ 18 billion would ensure the country’s tax revenue to GDP percentage stays within sustainable levels.
Secondly, the austerity measures that government has adopted are meant to cut public spending and this has taken a toll on service delivery allocations leading to massive shortages of drugs, neglect of road rehabilitation and other essential services.
Economist, Tafadzwa Chikumbu believes the nexus between domestic debt and public service delivery in the country has not been fully understood.
“Substantial amounts of the country’s domestic debt are owed to service providers and statutory bodies and this has compromised public service delivery and other essential human rights obligations since public funds meant for social service delivery will be directed towards debt repayment,” Chikumbu said.
Harare City Council, for instance, has been incapacitated to execute service delivery owing to resource constraints yet government owes the council close to US$ 10 million.
Various state departments also owe the electricity provider ZETDC millions of dollars, yet the power utility is struggling to repair its dilapidated infrastructure to improve power generation.
With Zimbabwe’s total debt now at a staggering $ 18 billion, the national debt per capita stands at US$ 1 286, (This is the share amount each of the 14 million Zimbabweans owe) yet the ordinary Zimbabwean survives on less than US$ 1 a day.
This is despite the fact that government continues to seek further lines of credit.
