6 July 2012

Zimbabwe: Debt a 'Ticking Time Bomb'

Photo: Kate Lucy/AllAfrica
Several billion dollars worth of minibus fare.

A former Zimbabwean diplomat has warned that the country's massive international debt is a "ticking time bomb," which threatens to destroy any hope of economic recovery.

The country's bill is believed to be hovering between 8 and 10 billion dollars, which Reserve Bank Governor Gideon Gono warned in May was "a serious developmental constraint for the economy."

The picture was clearly painted by Deputy Prime Minister Arthur Mutambara in July last year when he explained that Zimbabwe "is practically broke," with the national debt now outstripping the country's gross domestic product (GDP).

"If you owe someone US$7 billion and your GDP is US$7 billion then you do not have any money," said Mutambara, who added: "We are heavily borrowed and we do not have a GDP to talk about."

According to former diplomat Clifford Chitupa Mashiri, the lack of agreement on solutions to the staggering debt "could trigger civil strife and instability in the not so distant future."

Mashiri said the government was being irresponsible by allowing rampant spending, such as Mugabe's frequent trips to Singapore that cost millions of dollars each time. Mashiri also said that it was a "tragedy" that Zimbabwe's rich natural wealth was not helping to solve the debt crisis, because the profits remain beneficial only to ZANU PF cronies and not the country's shattered economy.

"Before considering options for settling Zimbabwe's debt problem, it is important to deconstruct what the debts were secured for and why the present and future generations should pay for what are believed to be toxic loans which allegedly funded political oppression and impoverishment," Mahsiri argued.

He added that a transparent and independent audit of the country's external debt would then be the only way to move forward, because there is a chance that any debts resting on illegal or illegitimate transactions could be written off. But Mashiri said it was unlikely that ZANU PF would allow an audit to happen while it is in power because such an investigation would uncover the "dodgy deals" that some party members have been involved in for so many years.

"Zimbabwe's coalition government has a choice to make - between complacency and going for a debt audit, without which the country could be sleep-walking into an uncertain and very unstable future," Mashiri said.

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