Zimbabwe: ED Govt Urged to Dump Unyielding Foreign Debt Policy

President Emmerson Mnangagwa is welcomed by Guinea President Alpha Condé on arrival at Airport Conakry Gbessia.
3 November 2018

TOP economists have scorned President Emmerson Mnangagwa's choice of international debt as panacea to Zimbabwe's age-old economic crisis while ignoring local solutions that did not plunge a crisis prone country into further liability.

Economist Persistence Gwanyanya on Friday urged Zimbabwean legislators to leverage on their oversight role derived from the country's laws to ensure government resorted to much more sustainable solutions.

Gwanyanya, who was making a presentation during a pre-budget seminar for MPs in Harare, said continued attempts to anchor the country's economic recovery hopes on institutions that had connections, direct or otherwise, with hostile America were futile.

"There is need to look at the problem from a broader perspective," he said.

"The current move which has seen several meetings being held with the International Monetary Fund and the World Bank for credit lines may not solve the problems we are facing.

"These institutions have shareholders who may not be interested in lending the country despite its creditworthiness."

Gwanyanya said that the United States, being the most influential stakeholder among global lenders, was against the idea of extending lines of credit to Zimbabwe.

"I have met officials from these global creditors and they have told me that they wanted to extend lines of credit to Zimbabwe but could not do so because their shareholders are not interested in that," he said.

The US still has in its statutes, the sanctions law imposed 2001 against the then Robert Mugabe led administration.

The controversial law embargos any trade or credit lines to Harare by American firms, individuals or any other world institution with links to Washington.

Gwanyanya said there was need for Zimbabwean authorities to change course, for example, leveraging on the country's gold reserves as backup when seeking credit.

Zimbabwe National Chamber of Commerce CEO and top economist, Chris Mugaga said Zimbabwe's overreliance on credit could only further impoverish the nation.

"Credit is not always sustainable as it further impoverishes the nation," he said.

"There is need to explore alternatives such as relying on savings because these are cheaper financing sources."

Zimbabwe is saddled with a US$9.5 billion domestic debt and a US$7.4 billion external debt, bringing the public debt liability to a total US$16.9 billion.

Finance Minister Mthuli Ncube has pulled all the stops to raise funding so as to try and offset part of the country's giant debt burden which has stood in the way of attempts to reverse years of economic decay.

Ncube is keen on seeing an end to the debt crisis to make way for new capital which would further open fresh avenues for the private sector to secure loans key to revamping its manufacturing sector.

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