Zimbabwe’s debt climbs to $19 billion
Deputy Chairman of the Citizens Coalition for Change (CCC) and re-elected MP for Harare East, Tendai Biti, has lambasted the government for overseeing a ballooning consolidated debt for Zimbabwe which now exceeds US$19 billion.
Biti was speaking at the 3rd Annual Zimbabwe Debt Indaba, a conference organized by leading economic and social justice organization, the Zimbabwe Coalition on Debt and Development (ZIMCODD).
The former finance minister said the current debt assumption schemes cover up the fees, omissions and illegalities of the Reserve Bank of Zimbabwe which were previously raised by the Public Accounts Committee (PAC).
He said the bloated debt, nearly 70% of gross domestic product, has been made worse by the Reserve Bank of Zimbabwe, which dominates with an expansive fiscal policy that misleads the unsustainable fiscal obligations of the Zimbabwean people.
“Zimbabwe’s consolidated debt now stands at $19 billion officially, or 65% of GDP, these figures are published in the conclusion of the IMF report which was published last week.
“The elephant in the room is the Reserve Bank and under John Mangudya it has become a rogue institution and in my view the country does not need the RBZ. Let’s have a currency board.
“All the RBZ does is engage in quasi-fiscal activities that ultimately lead to debt assumptions,” he said.
In 2015, the RBZ assumed $1.5 billion of government guaranteed debt, while in 2019 another debt of $3.5 billion in December 2021 was also assumed for repayment by ordinary taxpayers.
Biti warned that soon the government will burden citizens with another debt burden through the Financial Adjustment Bill 2019 which asks parliament to condone $10.6 billion in unbudgeted spending.
He said the RBZ is at the heart of these shenanigans, likening the current system to running a shadowy parallel budget, whose illegal spending is then forced on people through the assumption of debt.
“We have a rogue government that violates constitutional rights with its shenanigans and illegalities. We need a curator to analyze the legality of contracting the debt and also to prove whether the debt was used for its purposes,” Biti said.
ZIMCODD Executive Director Janet Zhou said civil society pressure for a national debt audit was key to strengthening parliament’s oversight role in the debt resolution process.
She called for a strong debt sustainability plan underpinned by a transparent government debt validation process which should also be considered from a human rights perspective.
“Right now we are just financializing debt, but we need to politicize these issues by engaging with debt and putting a human face on how it constrains the state’s ability to respond to social services.
“The debt audit should be linked with a social audit to understand the links with how a woman in rural areas accesses social services. We need to talk beyond validation, corruption and structural political challenges and look closely at how debt affects various groups in various ways,” she said.
An official from the Ministry of Finance and Economic Development said the government was seized with the debt burden and was consulting extensively on how to meet the challenge.
Currently, debt repayment strategies are defined as part of the Medium Term Debt Management Strategy (MDTS) which will be revised to cover the period 2022 to 2025 to address debt sustainability and risks. debt management.
The IMF’s Article IV report acknowledged this progress, while noting that the 2019 staff-monitored program experienced significant policy slippages and passed without review, putting the country on the right track. .
“Since then, the authorities have made significant progress towards restoring macroeconomic stability, although implementation of past IMF policy advice has been mixed. The authorities have developed a debt settlement strategy and started token payments to creditors in an effort to make progress on re-engagement,” the report read.