National debt balloons to US$18bn

ZIMBABWE’S national debt has risen to US$18 billion from US$17,6 billion in President Emmerson Mnangagwa’s first 15 months in power, official government documents show.

BY BRIDGET MANANAVIRE

The debt stood at US$14,6 billion as at December 2017. It shot up to US$16,9 billion in October last year before climbing to US$17,6 billion by end of year, according to Finance minister Mthuli Ncube’s 2019 budget statement.

This means it has risen by 23,3% since Mnangagwa took over power in a military coup which toppled his former boss, Robert Mugabe.

The latest figure is contained in minutes of a Bi-National Commission (BNC) meeting held earlier this week between Zimbabwe and South Africa. This comes as Zimbabwe is struggling to secure a bailout package to pay international financial institutions to enable the country to be considered in its quest to access new lines of credit and funding.

The debt continues to rise on the back of recent public borrowings to finance persistent budget deficits through Treasury Bills (TBs) and central bank overdrafts.

But during deliberations at the Zimbabwe-South Africa BNC meeting, Zimbabwe disclosed that its debt is now US$18 billion, split in half between domestic and international creditors.

“The commission was informed that the situation on the clearance of arrears has not changed since 2017. Zimbabwe’s total debt stands at US$18 billion, 50% being external debt,” minutes of the meeting say.

“It is critical for the country to expedite the clearance of arears to the international financial institutions (IFIs), the Paris Club and other creditors. Thus the immediate and urgent clearance of the IFIs arrears, estimated around US$2,4 billion, should be prioritised given the pari passu principle. The arrears include the World Bank (US$1,3 billion), the African Development Bank (AfDB) (US$650 million) and the European Investment Bank for the balance.”

Ncube last week unsuccessfully sought to build momentum through trips to Washington DC and Paris on the implementation of the debt clearance plan, on the table since 2015. He visited international financial institutions in the United States and France, where the Paris Club — an informal grouping of creditor nations whose objective is to find workable solutions to payment problems faced by indebted nations — meets.

In 2018, Ncube said Zimbabwe planned to clear its arrears with the AfDB and World Bank by September this year.

AfDB country manager Damoni Kitabire recently told the Zimbabwe Indepedent that the bank had received assurance that government would settle the debt between June and October 2018. That did not happen.

After failing to settle the arrears, Zimbabwe later promised to present a plan in November 2018 instead. That plan also did not materialise.

Zimbabwe has now taken its begging bowl to the region after being spurned by various countries, including its close ally China. Western countries are now drifting away.