By Deprose Muchena, OSISA Deputy Director
It is common cause that the Inclusive Government (IG) has presided over a dramatic economic turnaround, which has seen the country claw its way back from the brink of total economic collapse. It is also widely acknowledged that there are serious obstacles in the way of a sustainable economic recovery. However, it is not universally known that one of the most serious constraints – indeed it is an almighty albatross around the country’s neck – is Zimbabwe’s massive debt burden.
Zimbabwe’s sovereign debt overhang has not improved since the signing of the GPA or the inauguration of the IG – and it is not set to improve in the near future as the country battles to finance its economic recovery and social development.
The exact debt stock is debatable as official figures vary. However, Zimbabwe currently faces a debt overhang conservatively estimated at US$6.9 billion – including US$5.2 billion in external debt. Of the publicly guaranteed debt, US$3.2 billion is in arrears – including US$1.3 billion owed to multilateral creditors (International Monetary Fund, World Bank and other institutions), US$1.6 billion to bilateral creditors (Paris Club and other individual countries) and US$200 million to credit suppliers.
...The debt burden is the biggest albatross around Zimbabwe’s neck. It stands in the way of Zimbabwe’s economic recovery and long-term economic development. Its resolution requires domestic leadership and political will to reform policy, legislation and practice. In addition, the international community needs to be creative and supportive – realising that economic stabilisation is still in its nascent stages, recovery is still characterised by ‘jobless growth’ and key social sectors are still recovering from a decade-long malaise.The un-payable debt needs to be cancelled, thereby offering Zimbabwe a fresh start, under new economic governance rules, with brighter prospects.
The huge resource gap facing Zimbabwe requires it to strategically invest all of its rich natural resources, including diamonds, gold, and platinum, into national economic recovery and long term development and not to mortgage the resources of future generations to repay huge debts that were acquired under questionable circumstances.
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