CSOs warn against resource-backed loans 

Source: CSOs warn against resource-backed loans –Newsday Zimbabwe

REGIONAL public finance watchdogs have raised a red flag over Zimbabwe’s continued mortgaging of natural resources to secure loans from abroad.

This came out during the fifth edition of the Zimbabwe Debt Conference which was organised by the Zimbabwe Coalition on Debt and Development (Zimcodd) and the African Forum and Network on Debt and Development.

Participants revealed that the debt problem is not peculiar to Zimbabwe, but several Southern African Development Community (Sadc) countries such as Malawi, Mozambique and Zambia.

According to Zimcodd, as at the end of September, Zimbabwe’s total public debt, including the Reserve Bank of Zimbabwe debt was estimated at $10,97 trillion.

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

“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, the government has assumed the debts of parastatals including the Reserve Bank of Zimbabwe resulting in the ballooning of the national debt stock. Local government debt has also become unsustainable and is weighing heavily on public service delivery,” Zimcodd said in a statement.

If properly managed, Zimbabwe’s vast mineral resources could be leveraged on in addressing its debt challenges, Zimcodd said.

“However, the mining sector is the highest emitter of illicit financial flows. The 2nd High-Level Structured Dialogue Platform Meeting and the crafting of the Arrears Clearance Strategy demonstrate the determination of Zimbabwe to address the debt question.”

Last year the International Monetary Fund (IMF) warned least economically developed countries against taking resource-backed loans which it said could “backfire”.

Participants urged government to depoliticise and decriminalise the discourse on public debt management; particularly the demand for transparency and accountability, as well as involvement of citizens in the on-going structured dialogue platforms on debt clearance.