Domestic debt soars to $600b

Ngoni Chanakira

ZIMBABWE’S domestic debt, which stood at $346 billion in December 2002, rose to approximately $600 billion by December last year.



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The country’s total external payment arrears continued to increase, riling international creditors.



NMB Holdings Ltd chairman Paddy Zhanda this week said the debt was dominated by Treasury Bills, mainly two-year paper, which account for 97,5% of the total debt while government bonds account for the balance of 2,5%.


In his statement accompanying the group’s results for the period ending December 31 Zhanda said the government intends to further restructure the domestic debt this year by issuing more long-dated instruments.


The budget deficit is expected to reach $1,83 trillion this year and domestic debt is set to end the year at about $2,4 trillion.


Zhanda told investment analysts that the country’s balance of payments position remained precarious in 2003 largely as a result of poor export performance coupled with the absence of external capital inflows.


He said exports of goods and services were estimated to have fallen by 3,9% from US$1,603 million in 2002 to US$1,540 million in 2003.


Imports of goods and services fell less steeply from US$2,634 million in 2002 to US$2,618 million in 2003.


“The country is estimated to have recorded a current account deficit of US$1,130 million, slightly up from US$1,044 million in 2002,” Zhanda said. “The capital account deficit is estimated to have declined from US$345 million in 2002 to US$309 million in 2003.”


The chairman said the overall balance of payments deficit for 2003 was therefore US$1,439 million.


A seven-member International Monetary Fund delegation is currently in the country for the annual Article IV Consultation.


It has met the Reserve Bank of Zimbabwe governor Gideon Gono, Minister of Finance and Economic Development Chris Kuruneri and the opposition Movement for Democratic Change (MDC).


Zimbabwe’s overall balance of payments deficit for 2003 was therefore US$1,439 million.


The country owes the IMF about US$270 million.


Gono has promised that the country will repay all debts to the fund.

He, however, said the country needed to first pay its electricity and fuel bills to international creditors.


Zhanda said against the background of the weak balance of payments position, gross official foreign currency reserves for 2003 were estimated at US$175 million, which represent approximately one month of imports, while usable reserves were much lower at just under US$40 million.


Zimbabwe’s total external payment arrears continued to rise in 2003.

As of December 2003, external payment arrears were estimated at about US$1,8 billion, up from US$1,3 billion at the end of December 2002.

A breakdown of the external arrears shows that government arrears account for the largest portion at $1,2 billion (67%) while parastatals and the private sector account for US$558 million (31%) and US$15 million (2%) respectively.