Debt Accumulation Threatening The Sustainability Of Public Debt – World Bank

A World Bank report has revealed that debt accumulation is not sustainable for the public debt.

The report comes when the Zimbabwean debt has risen to US$18 billion from US$13,5 billion as of December 2017.

The report also stresses the importance of developing domestic financial markets and creating local currency bond markets. The report reads:

Debt accumulation is threatening the sustainability of public debt, as an increasing share is owed to private creditors and denominated in foreign currency. Developing domestic financial markets is necessary to attract domestic and financial investors to bring in more capital inflows. Creating local currency bond markets would help in diversifying the composition of debt and managing currency risks. So far, all the countries in the region show a dismal record on institutional quality, therefore, it is important to strengthen domestic institutions not only to support robust macroeconomic policy frameworks but also to foster domestic and foreign investment.

Zimbabwe has a huge debt overhang including $1,3 billion to the World Bank, US$680 million to the AfDB and US$308 million to the European Investment Bank.

Finance minister Mthuli Ncube introduced a number of austerity measures meant to contain the government’s expenditure and fiscal deficit.

Ncube is struggling to implement most reforms stipulated in the Transnational Stabilisation Programme (TSP) which hinge on politics, economic environment, and the country’s capacity to clear its debts and arrears.

Meanwhile, World Bank Africa region chief economist Albert Zeufack on Monday told journalists that inflation was also a major problem for states.

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More: The Independent

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One Comment on “Debt Accumulation Threatening The Sustainability Of Public Debt – World Bank

  1. Austerity measures are needed to contain the government’s expenditure and fiscal deficit for economic turnaround but the nation need to resuscitate the industry so that the nation will produce and start earning foreign currency.

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