ZIMBABWE’s businesses this week applied fresh pressure on government to end profligacy, saying unchecked extravagancy in President Emmerson Mnangagwa’s administration had thrown the country into a catastrophic debt trap.
In a frank paper in which the Zimbabwe National Chamber of Commerce (ZNCC) slammed government for agreeing to pay “very high” compensation to former white commercial farmers kicked out of their land in 2000, industry said authorities must invoke laws to punish overspending bureaucrats while forcing them to account to parliament.
The ZNCC said applying laws and policies to check government borrowing would help stop the mayhem that has crippled the fiscas.
ZNCC fired the broadside at government for failing to abide by standing policies, while giving transgressors headroom to push the economy down the swamps.
The ZNCC’s strongly-worded paper added to three weeks of showdowns over poor debt management by government, which has been accused of borrowing to find executive expenditures at the expense of growth stimulating capital projects.
The country’s foreign debt was estimated at US$10,6 billion last year, when government undertook to apply breaks on borrowing in order to contain a relentless inflationary surge and money supply growth.
But last week, the administration slipped into the eye of a raging storm again, after Reserve Bank of Zimbabwe statistics showed it had incurred US$2,23 billion in fresh debt between July 2019 and July 2020.
The central bank’s July economic review said net foreign liabilities had shot to ZW$366,35 billion in July this year, from ZW$23,28 billion in July 2019.
“No debt should ever be procured without the involvement of the parliament of Zimbabwe,” the ZNCC said in its submissions to the 2021 budget.
“The legislature must be held accountable for the stock of debt in the economy with regular market updates on debt being promoted exactly the same way updates on money supply,” said the paper.
The ZNCC said it was worried that a string of debts accumulated by Zimbabwe’s mostly insolvent State firms could be unaccounted for in publicly declared figures.
It said coming clean on debts like these would give a clear picture of the extent of government’s exposure.
The debt issue has been complicated by the fact that parastatals took many years to release financial results with little or no sanction from authorities.
“We believe government has guaranteed a lot of debts on a number of loss making parastatals and an urgent audit is required to ascertain the potential exposure of government. As long as some release their financials more than 24 months post financial period, the attempt to deal with debt remains futile. The Treasury needs to explicitly state the up to date figures for external and internal debt as of the month the budget is presented not December 2019 figures,” the ZNCC said.
Parliament last week threatened to take unspecified action against Finance minister Mthuli Ncube for delaying to update legislators about the debt situation.
The Public Debt Management Act compels the Finance minister to submit regular updates on debt dynamics to parliament.
Parliament’s misgivings were ignited by findings of a report released by the African Forum for Debt and Development, which slammed government for violating its own laws.
Publication of the debt is crucial to enhance accountability and transparency in public financial administration.
Afrodad’s report showed that until March, no debt bulletin had been produced by the public debt management office.
“The minister is not coming, so the question is what is it that we now need to do?” asked Felix Mhona, chairperson of the Parliamentary Portfolio Committee on Budget and Economic Development who spoke during a conference in Bulawayo.
“We are not sticking to some of the dictates of the Constitution. When we go back to parliament, we want to take the executive to account. It is no longer a talk show. I assure you as parliament that going forward, this (report by Afrodad) is a dashboard to say honourable minister, you are not bringing the reports to the house and we are sanctioning you,” he said.
The ZNCC said it was worried about the RBZ’s debt.
“The country cannot support the central bank debt which is paid with interest. We appreciate that the Global Compensation Agreement is a constitutional issue but believe that this is not a priority at the moment.
“The ministry should rather engage experts for the restructuring of the compensation agreement rather and not on raising the finance because the country has committed to a high figure. The US$3,5 billion compensation translates to payments of US$875 000 per farmer,” the ZNCC said.