If you have been following Zimbabwean politics you might be aware of the debt overhang impeding Zimbabwe's infrastructure and human capital investments. Some US$8bn (mostly arrears) is owed to private creditors and IFIs including the World Bank, and the AfDB. The MinFin, Mr. Biti has set out a plan to address this crippling debt and set Zimbabwe on a path to sustainable growth. The plan includes the removal of the illegal sanctions; leveraging of our country's natural resources (mainly diamonds and platinum); and strict debt management.
The plan, however, does not seem to tackle what I believe is an important issue, namely what happened to the money. IF only an elite group has been enriched by Zimbabwe's debt load, we must first get them to pay up. Not only will this set precedence that we are a country that respects the rule of law, but it will also let some of the country's platinum and diamond deposit revenues be put to better use instead of servicing debt. An independent debt panel needs to investigate and articulate how Zimbabwe got into so much debt in the first place, and how much, if any, of this debt was inherited from colonial times. I happen to believe that any debt incurred by a regime to service its own 'personal' ends should not be repaid by the people.
I understand that some of the loans were taken out during the infamous structural adjustment era, and that resorting to the HIPC - an initiative managed by the same IFIs that partly got us into this mess is a non-starter. Acceding to the HIPC will mean we take out more debt, at least in the short term, a move that seems counterproductive in light of the overall objective. I also understand that due to the political difficulties of the last decade Zimbabwe has accumulated arrears on outstanding debt. We defaulted on our debt to the World Bank in 1999. This has put us at a difficult situation vis-a-vis international partners.
Before we go around the world trying to renegotiate our debts or seeking outright debt relief, we need to get our house in order. Investors are going to be deterred when they see a coalition that is constantly arguing over every policy issue. We need to set a date for a credible election that will decide which party is in charge of government. The current transitional government is just that - transitional. If we can learn anything from the events in Greece, it is that if left unchecked debt can have disastrous effects on living standards. Our current debt of about $8bn is about 70% of national income, which places us up there in world rankings. Just to put things into perspective, our neighbor to the west-Botswana has debt to GDP of 17%, and South Africa stands at about 40%.
The plan, however, does not seem to tackle what I believe is an important issue, namely what happened to the money. IF only an elite group has been enriched by Zimbabwe's debt load, we must first get them to pay up. Not only will this set precedence that we are a country that respects the rule of law, but it will also let some of the country's platinum and diamond deposit revenues be put to better use instead of servicing debt. An independent debt panel needs to investigate and articulate how Zimbabwe got into so much debt in the first place, and how much, if any, of this debt was inherited from colonial times. I happen to believe that any debt incurred by a regime to service its own 'personal' ends should not be repaid by the people.
I understand that some of the loans were taken out during the infamous structural adjustment era, and that resorting to the HIPC - an initiative managed by the same IFIs that partly got us into this mess is a non-starter. Acceding to the HIPC will mean we take out more debt, at least in the short term, a move that seems counterproductive in light of the overall objective. I also understand that due to the political difficulties of the last decade Zimbabwe has accumulated arrears on outstanding debt. We defaulted on our debt to the World Bank in 1999. This has put us at a difficult situation vis-a-vis international partners.
Before we go around the world trying to renegotiate our debts or seeking outright debt relief, we need to get our house in order. Investors are going to be deterred when they see a coalition that is constantly arguing over every policy issue. We need to set a date for a credible election that will decide which party is in charge of government. The current transitional government is just that - transitional. If we can learn anything from the events in Greece, it is that if left unchecked debt can have disastrous effects on living standards. Our current debt of about $8bn is about 70% of national income, which places us up there in world rankings. Just to put things into perspective, our neighbor to the west-Botswana has debt to GDP of 17%, and South Africa stands at about 40%.
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