‘Mounting debt fuelling poverty, inequalities’ 

Source: ‘Mounting debt fuelling poverty, inequalities’ – NewsDay Zimbabwe

ZIMBABWE’s consolidated public debt figure has ballooned to US$19,03 billion, further fuelling poverty and inequalities in the country.

In a statement yesterday, the Zimbabwe Coalition on Debt and Development (Zimcodd) said the country’s debt crisis was affecting women and other vulnerable groups the most.

The International Monetary Fund (IMF) recently noted that the country was reeling in debt, a situation that might reverse its nominal microeconomic gains.

“The ballooning US$19,03 billion consolidated public sector debt represents  68,1% of gross domestic product, a threshold above acceptable ratios, with public and publicly guaranteed external debt standing at US$17,59 billion, of which arrears are at US$13,1  billion,” the Zimcodd statement read.

“These are drivers of poverty and inequality in Zimbabwe. For example, women in Binga struggle to access maternal healthcare. Debt servicing diverts money that is meant to finance public expenditure. This then results in poor access to basic services such as health, education, water and sanitation,” it said.

Zimcodd said while government was targeting a US$12 billion mineral-anchored economy by 2023, mining tax revenue to finance basic services was barely mentioned.

Economist Prosper Chitambara expressed concern over the country’s continued accumulation of debt.

“The biggest concern is that the country continues to incur more debts that are non-concessional, which means these debts come with high interest rates. We continue to accrue penalties because we are not able to service our debts,” Chitambara said.

He said the country’s indebtedness would affect businesses that were not able to borrow at good rates, hence the need to address the situation.

“Debts make it difficult for Zimbabwean businesses to be able to borrow offshore at concessional rates and terms. The issue needs to be addressed once and for all.  However, to effectively address that, the economy must grow sustainably and the macroeconomic environment must be conducive for greater investments.

“As long as we are able to attract more investment especially in the critical sectors, then that may obviate the need for the country to borrow,” Chitambara said.