Debt surges

Eric Chiriga

GOVERNMENT’S domestic debt has ballooned to $16 trillion, an increase of about $13,3 trillion since the beginning of the year, as government fails to rein in expenditure.


<
P>According to statistics from the Reserve Bank of Zimbabwe, on December 31, 2004 government’s domestic debt stood at $2,79 trillion.


Recently, Finance minister Herbert Murerwa announced in his mid-term fiscal policy review that the National Social Security Authority (Nssa) should increase its investment in the prescribed asset ratios from 15 to 35%. This is government’s move to widen its revenue.


Government’s domestic debt has for some time been on an upward trend. As of June 24, the debt was $11,6 trillion while on May 27, the debt stood at $10,08 trillion.


In his 2005 national budget statement, Murerwa said the expenditure outturn and net lending up to September 2004 was $6,25 trillion against a target of $6,59 trillion.


This year the country is expected to have a GDP growth of 2-2,5%, down from the initial forecast of 3-5%. The revised decline in the GDP has been blamed on the decline in performance of the agricultural sector.


GDP is one of the key components of measuring a nation’s economic performance. Over the past four years, major contributors towards the GDP – mining, agriculture, tourism and manufacturing – have been in a freefall since the government embarked on the ill-planned land reform programme.


The manufacturing sector has declined by more than 35% with the situation being compounded by the fuel crisis. Tobacco production, once the country’s major foreign currency earner, has gone down by 58%.


The tourism sector at its peak contributed 6,5% towards the GDP, while agriculture and manufacturing contributed 16 and 18% respectively.


The country is currently in its sixth consecutive year of economic recession.

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