‘Zim’s opaque debt data stifles growth’

THE Zimbabwe Coalition on Debt and Development (Zimcodd) has warned that the lack of transparency surrounding the country’s total debt will limit investors’ ability to accurately assess the state of it and make informed decisions.

This, in turn, will stifle economic growth.

Zimbabwe’s public and publicly guaranteed debt situation continues to deteriorate, with the latest revelations by authorities showing that debt stock has reached US$18 billion, up 1,7% from US$17,7 billion reported in the 2023 public debt report.

“Official debt statistics are often not transparently reported, as the Treasury has reportedly shared varying debt stock with creditors, providing figures between US$19,2 billion and US$21,9 billion,” Zimcodd said in its June 2014 economic report.

“This lack of transparency is a significant concern as it hampers the ability of economic agents and investors to accurately assess the state of public debt and make informed decisions — underlining the crucial need for transparent and reliable debt reporting.

“Authorities must improve debt transparency by reconciling, validating and reporting audited debt statistics. This will reduce corruption, allow creditors to make informed lending decisions, facilitate investments and enable citizens to hold the government accountable.”

It noted that authorities have admitted before Parliament that total public and publicly guaranteed debt stock will jump as it is undergoing debt validation and reconciliation.

Expected additions include US$1,9 billion for recapitalising the Mutapa Investment Fund and US$1,2 billion assumed from the central bank.

“Consequently, debt servicing costs will balloon, jeopardising government financial stability. This will threaten ZiG’s [new currency, Zimbabwe Gold] stability and provision of critical public services like education and healthcare as more resources must be earmarked for debt servicing,” the organisation said.

“The public and publicly guaranteed debt is already in distress as shown by ballooning arrears and penalties where about 74% and 81% of combined bilateral and multilateral debt are interest and principal arrears and penalties, respectively.”

Zimcodd said debt unsustainability has blocked access to concessionary sources of finance to fund infrastructure developmental programmes. It also sustains unsustainable extraction of natural resources through reliance on risky resource-backed loans.-newsday