HomeBusiness DigestGovt's domestic debt maintains downward trend

Govt’s domestic debt maintains downward trend

Paul Nyakazeya

GOVERNMENT’S domestic debt maintained a downward trend, slumping to a two-month low of $107,1 billion in October after another decline in September

that put the debt stock at $119,4 billion.

Statistics from the central bank indicate that domestic debt peaked at an all-time high of $127,4 billion in mid-September.

The Reserve Bank of Zimbabwe said domestic debt stood at $107,1 billion as at October 27, declining by $12,3 billion from $119,4 billion.

Government’s domestic debt consists of government stocks, treasury bills and central bank advances.

Since January this year, domestic debt had been on an upward trend until the sudden downward trend started in September.

Since January this year, domestic debt has been on an upward trend.

Government said its borrowing had been bloated by food and fuel imports.

The country, once the region’s breadbasket, has been dependent on imports to feed its people due to disruptions caused to the farming sector by a controversial agrarian reform as well as poor harvests caused by draught.

Government’s domestic debt opened the year at $14,1 billion and has been consistently rising since then.

With limited or no meaningful sources of offshore support for the budget, government has aggressively borrowed from the domestic market where high interest rates have significantly increased the domestic debt level.

A highly inflationary environment has created huge deficits in the national budget, forcing government to resort to aggressive borrowing.

Last year, the budget deficit out-turn was at 60% of gross domestic product, according to figures released by the International Monetary Fund.

Government had, however, claimed the budget deficit for the year was a paltry 3% of GDP.

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