A new report has suggested that Zimbabwe will remain in debt due to its appetite for unsustainable loans and the absence of a comprehensive debt management plan.
The report was presented at the Zimbabwe Annual Multi-Stakeholder Debt Conference hosted by African Forum and Network on Debt and Development (Afrodad) and Zimbabwe Coalition on Debt and Development (Zimcodd).
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It also predicted that the country’s debt would continue to rise due to governance issues and more borrowing to fund large fiscal deficits and quasi-fiscal activities. Tirivangani Mutazu, a senior policy analyst at Afrodad said:
Zimbabwe will remain in debt distress for a very long time. There has not been detailed reporting of debt operations in Zimbabwe despite the information on debt contained in annual financial and annual budget statements presented to parliament.
The country’s public debt has also been increasing due to large fiscal deficits and quasi-fiscal activities conducted by the Reserve Bank of Zimbabwe. Budget deficits increased from US$185 million, which is 0,9 percent of GDP, in 2014 to US$2,7 billion in 2018, representing 11,8 percent of GDP.
Reginald Chaoneka, a debt analyst, said while the debt is necessary to assist in the country’s Covid-19 response to the economic and humanitarian impacts, it has the potential to further complicate negotiations with external creditors to restore debt sustainability.
This comes amid reports that some of the borrowings were effected without the authorisation of the Parliament as stipulated by the Public Finance Management Act.
Zimbabwe’s lines of credit have been dwindling since the turn of the millennium which means there is the need for financial prudence since the government is relying on internal funds to fund its operations.
More: Daily News