‘Sanctions frustrate Zim debt resolution efforts’
THE imposition of illegal Western sanctions on Zimbabwe is hindering smooth debt management resulting in continuous escalation of arrears and penalties as the country struggles to service its obligations.
Zimbabwe has been reeling under the punitive economic embargo for the past two decades and this is frustrating economic growth through constrained investment, slowdown in industrial operations and limited trade prospects, among others.
In an interview in Bulawayo, Finance and Economic Development Deputy Minister, Clemence Chiduwa, said while the country was generating revenue through taxes, this was not enough to steer formidable progress and the local companies were suffocating under sanctions.
“We are failing to service our debt because of the hamstrung on our ability to pay. Government gets most of its funds from taxations and sanctions have affected the ability of the industry to produce. This, then means we are going to raise less revenue,” he said.
“When we raise less revenue, it means we are not in a position to service our debt. So, sanctions are affecting the performance and productivity of the industry, which then constrains us from the collection of fiscal revenue.”
The Deputy Minister said sanctions have resulted in closure of many industries in the country with Bulawayo, once considered the country’s industrial hub with flourishing factories, bearing the huge brunt.
The situation has seen many people losing their jobs, which has pushed unemployment rate higher with more people now operating in the informal economy where revenue performance is lower. All this limits the country’s ability to service its debts.
According to Treasury, Zimbabwe continues to grapple with an unsustainable debt burden estimated at US$16,7 billion (61,6 percent of GDP), as at end June 2022.
Of the above, total Public and Publicly Guaranteed (PPG) debt, US$13,2 billion is external debt while US$3,5 billion is domestic debt.
Deputy Minister Chiduwa said of concern is the accumulation of external debt payment arrears and penalties for the past two decades, which are now estimated at US$6,6 billion, as at end June 2022.
Zimbabwe National Chamber of Commerce Matabeleland chamber vice-president, Mr Louis Herbst, concurs that sanctions have resulted in loss of revenue and support from financiers, which have contributed to low development in industries and other sectors of the economy.
“Sanctions on Zimbabwe have had a huge impact on industry. For example, Zimbabwe has lost well over US$42 billion in revenue over the past 19 years because of sanctions,” he said.
“This includes lost bilateral donor support estimated at US$4,5 billion annually since 2001, US$12 billion in loans from the International Monetary Fund, the World Bank and African Development Bank, commercial loans of US$18 billion and a GDP reduction of US$21 billion.
“As a consequence, the significant progress that Zimbabwe had made in the development of infrastructure, as well as health, education and other social service delivery systems had been severely reversed. This has resulted in the most vulnerable sections of the population falling into poverty.”
Deputy Minister Clemence Chiduwa
A study done by the University of Zimbabwe also indicates that the country lost about US$4,8 billion worth of revenue in the manufacturing sector in 2010 and US$2,1 billion in 2015 due to Western sanctions.
African leaders, in solidarity with Zimbabwe, however, have joined hands in lobbying for the unconditional removal of the punitive measures saying these are hurting the entire South African Development Community (Sadc) region.
Sadc has maintained that the economic sanctions imposed on Zimbabwe are hurting the entire southern African region hence the economic bloc on October 25, 2019, embarked on a campaign to speak with one voice against sanctions on Zimbabwe. — -chronicle.co.zw
