eBusiness Weekly
Enacy Mapakame
The quantum of the country’s actual debt remains a mystery while official figures are suspicious with fears the debt to Gross Domestic Product (GDP) ratio could be at 100 percent or more, as different sources place it between U$13 and U$21 billion.
Various quarters such as the Ministry of Finance and Economic Development, the civil society and the International Monetary Fund (IMF), have all thrown in different figures about the total debt, creating a mystery over what the country really owes at domestic and international level.
Deliberations by stakeholders at the just ended 4th Zimbabwe Annual Debt Conference hosted by African Forum and Network on Debt Development (AFRODAD) in conjunction with the Zimbabwe Coalition on Debt and Development (ZIMCODD) in Bulawayo, showed the opaqueness of the country’s actual debt with fears there could be distortions even on the debt to GDP ratio, which the SADC region has benchmarked at 60 percent. Debt as a percent of GDP is used by investors to measure a country’s ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields.
Presenting findings from the 2022 Annual Debt Management Report, former Minister of State in the inclusive government and now Lupane State University Lecturer, Dr Gorden Moyo, said it was difficult to quantify the country’s actual public debt due to the seeming secrecy surrounding debt contraction and actual composition of debt with various organisations coming up with their own figures based on their research and analysis.
“There are challenges with research, challenges of data opaqueness, there are people who will not give you the information you want and there is always hiding of information. So we tried to come up with something but it is not anywhere near the real picture of the debt in the country. The quantum of public debt in Zimbabwe is difficult to put, to really say how much do we owe as Zimbabwe — sovereign debt, there are figures all over. Treasury said the external debt is approximately US$13,2 billion and domestic debt about $1,2 trillion. That’s the official figures and are always treated with suspicion.
“But estimates from various reputable organisations such as the IMF, put it at US$17 billion while civil society says its US$19 billion and others put it at US$21 billion. This makes it difficult to really know the actual figure and there are reasons to that, this is not just about ballooning of numbers but it’s out of analysis,” he said.
Stakeholders at the conference also agreed this could distort other statistics such as the debt to GDP ratio. It was also generally agreed the country’s debt is unsustainable and making it difficult to secure fresh lines of credit from multilateral lenders.
Against this, chairperson of the Committee on Budget, Finance and Economic Development, Dr Matthew Nyashanu, said the committee was not comfortable with the debt levels the country is battling.
“We have had several engagements with the Ministry of Finance and Economic Development as far as the debt is concerned, we do not feel very comfortable because of the levels of debts our country is in. Some say we are around US$17,9 billion some say we are around US$14,9 billion, the question has always been to say are our GDP figures correct? If they are not correct it means our debt to GDP ratio could be over 100 percent and not 70 percent,” he said.
The Zimbabwe External Debt to GDP is projected to trend around 78 percent of GDP in 2022 and 76 percent of GDP in 2023.
Other challenges cited in the report with regards the debt include lack of clarity and implementation of the debt restructuring programme, hidden debts, mortgaging natural resources as well as overlooking the role of Parliament in contraction of some debts.
Despite these challenges, the civil society, however, commended efforts that have been made by Treasury of recent in improving fiscal transparency such as publication of a debt bulletin, budget consultative meetings and seeking input from civil society on budget processes, which they described as a step in the right direction towards achieving transparency and accountability in public finance management.
