Experts are warning that Zimbabwe's appetite for Chinese loans is pushing the country's foreign debt to unsustainable levels.
According to former finance minister Tendai Biti, who held the post between 2009 and 2013 when Zimbabwe made some steady progress towards clearing its foreign debt, President Emmerson Mnangagwa's government contracted a staggering $2.5 billion in external debt between July 2019 and July this year.
This has pushed Zimbabwe's external debt to $4.8 billion.
Mr Biti said the majority of the loans were acquired by the new government without parliamentary approval.
"The (Reserve Bank of Zimbabwe) is a rogue bank that has been key to sustaining the (Zanu PF) agenda of regime survival and state capture," he said.
In a joint report released on October 6, the African Forum and Network on Debt and Development (Afrodad) and the Zimbabwe Coalition on Debt and Development (Zimcodd) said the country's external debt situation reflected a deteriorating economic situation.
"The country's public debt has been increasing due to large fiscal deficits and quasi-fiscal activities conducted by the Reserve Bank of Zimbabwe," Afrodad and Zimcodd said in the Annual Debt Management Report for Zimbabwe 2020.
The report added: "Budget deficits increased from $185 million (0.9 per cent of GDP) in 2014 to $2.7 billion in 2018 (118 per cent of GDP)."
Afrodad and Zimcodd said the country's foreign debt situation will worsen after President Mnangagwa's government agreed to compensate white farmers who lost their land during a land reform programme a decade ago. The deal will see the government give $3.5 billion to the former land owners. Most of the money will be sourced through external loans.
"In the absence of a comprehensive resolution of the ongoing debt crisis, the debt situation will continue to worsen and will inhibit the achievement of the country's development aspirations," the report said.
While Zimbabwe is unable to access long term concessional financing from traditional development partners, the government is still accessing funding from commercial sources such as China Exim Bank.
Most of the loans are collateralised against future commodity exports.
"Although this is necessary to assist in the country's response to the humanitarian crisis, it will further worsen debt sustainability indicators and potentially complicate negotiations with external creditors," Afrodad and Zimcodd added.
After the fall of long time ruler Robert Mugabe in a military coup in 2017, the Chinese gave Zimbabwe millions of dollars for power projects and other infrastructure developments.
However, the acquisition of the loans remains opaque and could come back to haunt the fragile economy.
"There has been no detailed reporting of debt operations in Zimbabwe," the Afrodad and Zimcodd report added. "Information on the public debt is sparse with very limited data provided on portfolio costs."
The Zimbabwean economy, once among the most advanced in sub-Saharan Africa, has become one of the most vulnerable economies in the region.
"A weak economy, coupled with lack of robust mechanisms for resolving the accumulation of external arrears, has made Zimbabwe to remain in a debt distress situation for a very long time," the report adds.
Finance Minister Prof Mthuli Ncube insisted the rapid foreign debt accumulation in the last year did not point to a crisis.
"This is actually structured debt, structured around commodities in terms of what the central bank has been doing to structure borrowing supported by gold, platinum and so on," Prof Ncube said.
"Some of it is legacy debt from the currency reform agenda."
Zimbabwe started looking to China for loans after it was blacklisted by major Western lenders such as the World Bank, International Monetary Fund and the Paris Club after it stopped paying back outstanding loans.
The government's efforts to re-engage the international lenders in the aftermath of the coup have stalled because of concerns over continued human rights violations and economic mismanagement.