GOVERNMENT is guesstimating the real domestic debt figure despite announcing that it settled a significant portion of it last week as chaos continues to characterise official communication on the state of the economy, businessdigest has learnt.
According to the 2019 National Budget, the country’s domestic debt stood at $9,6 billion at the time of the statement in November 2018, while the total debt stood at $17,6 billion.
This comes amid claims by officials that government is now liquid and no longer had pressure from the local market.
Last week, permanent secretary in the Ministry of Finance George Guvamatanga told a KPMG Audit Committee Forum that government had settled ZW$1,5 billion in domestic debt, but Accountant-General on Daniel Muchemwa on Wednesday denied any knowledge of such payment.
“From September 2018 to July 3, 2019, we have repaid over ZW$1,5 billion of domestic debt predominantly in Treasury Bills (TBs). We have only issued just below $300 million of TBs. So we have reduced the extent of our borrowing as government from the domestic market. At any given time these days, government sits on credit balances. Not only credit balance on RTGS, my accountant-general will tell you that we have credit balances in US dollars,” Guvamatanga told the forum last week.
However, on Wednesday this week, Muchemwa, who said his job entails making payments, revealed that the government is yet to establish what the real figure for domestic debt is and is awaiting a report by a World Bank team which had been assigned the task.
Muchemwa — in sharp contrast to Guvamatanga has said — told businessdigest on the sidelines of the launch of the Institute of Chartered Accountants (ICAZ) Zimbabwe International Public Standards (IPSAS) certificate in the capital that he was expecting the report next week. But he confirmed that government was now in a position to settle the debt with the computation of the exact figure being a drawback.
“Speaking of the foreign debt, we are done with IMF, we still owe AfDB US$600 million, World Bank is about US$2,5 billion (the figure has previously been given as US$1,3 billion). We are still re-engaging. We are trying to look for those who can help us to pay back as those that we owe will not give us a cent until we pay. It is going to take time and, until we pay that debt, it’s going to have serious constraints on our foreign currency status.
“On the local debt, we did an exercise with a team from the World Bank to establish our debt. I understand the report is ready. I haven’t seen it yet, but I’m expecting it next week. I’m confident that when we get that we will pay. It’s not our intention to bankrupt the local companies,” he said
Quizzed on whether he was certain he had not paid anything towards clearing the domestic debt, Muchemwa said he was not anticipating to be asked specific numbers and thus he could not provide them. But he remained adamant that the exact figure was yet to be known from the report, raising questions on what Guvamatanga had said.
“How can we pay it when we don’t know it? You see, numbers need accuracy. May you not ask me specific numbers when I’m here, I might end up giving you wrong figures. I wasn’t anticipating it, but our treatment of the local debt is that we engaged a team to establish what it is exactly that we owe and they have just produced a report. Once we have the report we will pay. You are free to phone me next week and ask for the report. I’m a public servant. It’s your right to know,” he said.
There have been questions on Zimbabwe’s exact total debt, with some estimates saying it is not US$17,6 billion but US$23 billion..
The country is struggling to nail down a debt clearance roadmap which has been on the table since 2015. The plan is centred on urgently clearing US$2,6 billion in external debt arrears.
Clearing the foreign debt is critical for the country to restore international funding, fresh lines of credit and confidence in the market, as well as to stabilise the financial services sector, particularly in view of currency volatility and liquidity crisis.