GOVERNMENT’s use of Treasury Bills (TBs) to settle its debts and pay for recurrent expenditure is unsustainable and is harming future generations that will be saddled by very high debts, economists have warned.
BY PAIDAMOYO MUZULU
The domestic debt now hovers above $5 billion.
Government on Monday committed to paying $180 million 2016 civil servants’ bonuses and $181 million in TBs to the National Social Security Authority (NSSA) as arrears in pension remittances since 2013.
The TBs to NSSA mature in seven years and have a 5% interest rate per year. The economists concurred that the worst would come around 2020 when most of the TBs start maturing and would need nearly a billion dollars to service.
Economist Godfrey Kanyenze said this was unsustainable and would harm the economy in the long run.
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“In his 2017 budget, the (Finance) minister (Patrick Chinamasa) warned about this government’s insatiable appetite to spend. The issuing of TBs is not a solution, but postponing the inevitable,” he said.
Kanyenze said this was bad for the country’s future economic prospects.
“It (TBs) is not sustainable and has since become a form of currency. It will create a futureless growth and undermines the next generation’s wealth. Debt financing without reforms is not sustainable,” he added.
Economist and MDC-T MP Eddie Cross, who also sits on the Parliamentary Budget and Finance Portfolio Committee, said the practice was increasing national domestic debt.
“This is slowly killing the economy as it will choke with debt. The minister has said TBs are a monetary instrument, but in reality this is debt. Domestic debt now exceeds $5 billion and this is not sustainable in an economy that is neither producing nor exporting goods,” Cross said.
The MP pointed out that the government was contracting new debt without Parliament’s approval as required by the Constitution.
“They (Zanu PF government) are not seeking approval of the House. Zanu PF is abusing its majority in the House and does what it wants as it resorts to divide the House when we raise these issues in Parliament during debate or motions,” Cross said.
Chinamasa could not be reached for comment on the exact amount of the national debt.