A researcher working on the Zimbabwean arrears clearance strategies has said that the southern country is in trouble if no measures are taken to reduce the debt, which is currently at US$16.9 billion, during a Zimbabwe Economic Policy Analysis and Research Unit (ZEPARU) validation workshop in Harare yesterday.
Erina Chipungu, who was presenting during the validation of the “Assessment of Arrears Clearance Strategies and Sustainable Debt Policies for Zimbabwe” during the workshop revealed that the country’s unsustainable debt could stretch up to 20 years if no measures are taken to address the crisis.
“If we look at maybe the sustainability of Zimbabwe’s external debt using the IMF (International Monetary Funds) debt sustainability analysis, we can see that maybe over a 20 year period from 2017 to 2037 it just indicate that Zimbabwe… will continue in an unsustainable debt even for the next 20 years,” Chipungu said.
Representatives from the Non-Governmental Organisations (NGOs), business leaders and different state ministries participated in the validation of two ZEPARU studies.
Chipungu also said that Zimbabwe’s both the domestic and the external debts are unsustainable during the workshop organised by ZEPARU, the Zimbabwean thinktank.
The domestic debt becomes unsustainable as it expanded from US$275.8 million in 2012 to the current levels of US$9.5 billion according to the Minister of Finance and Economic Development, Professor Mthuli Ncube.
Chipungu said, “So if we try to see just to see, maybe the proportion of domestic debt to the total debt in Zimbabwe… we can see that from 2013 only, it (debt) only constituted about 7.5% of the total debt, but this time it was growing and in 2017 it was now constituting about 49% of the total debt because we are saying these figures are in US Dollars.”
Zimbabwe, which has been in debt distress since 2000, defaulted on external obligations to the international funders and the country being denied access to external financing from traditional bilateral and multilateral deals as a result according to the research which was under validation.
Besides validating the debt clearance paper, participants also validated the “Assessment of the Macroeconomic Policy Formulation and Implementation Processes in Zimbabwe” and questioned the consistency of policies in the country.
Commenting on the debt clearance paper, a participant said Zimbabwe should come up with its own model of solving the country’s arrears crisis.