Debt Accumulation Threatening The Sustainability Of Public Debt - World Bank

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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• LIVESTREAM: RBZ’s Mangudya Gives Evidence On Bond Notes, RTGS and Debt Contraction.

More: The Independent