Zimbabwe fails to service domestic debt as economic crisis worsens

via Government fails to service domestic debt as economic crisis worsens | SW Radio Africa by Mthulisi Mathuthu on Monday, March 17, 2014 

The extent of the ZANU PF government’s inability to combat economic decline has been revealed in the collapse of service delivery across the board, with state departments and parastatals failing to service debts.

Weekend reports said Masvingo Municipality is owed close to $21 million by rate payers, with the Zimbabwe National Army owing $5 million. The Zimbabwe Prison Service and the Zimbabwe Republic Police owe the country’s oldest city $1.5 million each. According to reports, the struggling Cold Storage Company also owes $1 million. So desperate is the situation that the local authority is considering suing the army.

In another development, the Grain Marketing Board (GMB) says it is owed over $42 million by government. This is the money which the parastatal used to finance government’s social responsibilities.

GMB General Manager Albert Mandizha told Parliament last week that the government also needs $1.5 million to pay farmers for the grain supplied last season. He told the parliamentary portfolio committee on agriculture that the parastatal was recently forced to divert money from commercial operations to ‘plug the hole.’ Mandizha said another debt which is ‘a challenge and a concern’ to the GMB is the $8.5 million which government owes to transporters who ferried grain during the distribution of the grain loan scheme.

From Chegutu, reports said Pfupajena suburb has been without water for the last eight years and yet the local authority has all along been billing residents every month for a non-existent service. At the same time the Town Clerk, Alexio Mandigo, earns a monthly salary of $8,000. ZANU PF activists last year reportedly prevented the UN funded refurbishment of the town’s drainage system, demanding to have a say in the implementation of the project.

Economic analyst Masimba Kuchera said: ‘The decision not to service the domestic debt is a deliberate decision because the government is clearly broke.’ Kuchera blamed the situation on the government’s ‘misplaced priorities’. He said the government is simply spending instead of growing the economy to broaden its tax base.

Kuchera added: ‘The situation is also a clear sign that there is something wrong with how the government is handling taxation. There are a lot of leakages, especially in the mining sector, and that money should be the one plugging these holes.’

Kuchera’s comments come after Transparency International Zimbabwe revealed that an estimated $50 million worth of gold is smuggled out of Zimbabwe every month and the country is losing more through secret financial deals and tax evasion.

Last week MDC-T legislator Eddie Cross told SW Radio Africa that ZANU PF had neither the capacity nor the leadership to restore the rule of law and stop both the economic decline and corruption.

Countrywide, local authorities have reported a decline in revenue, something which they say has significantly affected service delivery. Reports say this has been the case since just before last year’s polls when the government ordered the cancellation of debts owed by the rate payers.

Corruption has also been blamed for the situation. Recent reports said the Harare City Council managers may have swindled part of the $144 million Chinese loan meant for the rehabilitation of the water and drainage system. There are fears that another deal with an as yet unknown South African company could result in a similar development. According to Town House the deal, estimated at $3 billion, is meant to refurbish Harare’s water delivery system.