SADDLED by a US$21 billion debt overhang, Zimbabwe has struggled to channel sufficient budgetary support towards social service expenditure.
Latest figures, which emerged from this week’s dialogue platform steered by the African Development Bank (AfDB), showed that the country’s external debt stood at US$13 billion, while a further US$8 billion accounts for domestic debt. Decades of neglecting to service the debt obligation have left Zimbabwe barred from accessing fresh loans from the International Monetary Fund (IMF), the Paris Club and other global lenders.
Shut off from international financial markets, the country’s repeated efforts to borrow internally have hampered private sector investment, triggered currency volatilities and spiked inflation. As a result of the ballooning debt, the southern African nation is drowning in choppy waters and financial turmoil.
Social services such as health, education, power, water and sanitation have virtually collapsed as the government struggles to shrug off a crippling fiscal squeeze, which has affected the economy for decades now.
Apart from battling to extinguish the debt, the government is also struggling to pacify its restive workforce, which is demanding better remuneration in a harsh economic environment.
Yet in the face of this seemingly insurmountable obstacle, parties to Zimbabwe’s debt clearance strategy, have emphasised that Harare can only ease its woes by implementing key reforms demanded by some of its creditors.
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These include economic growth reforms, land tenure issues, improvements in governance and the resolution of Bilateral Investment Protection and Promotion Agreements, which Zimbabwe should address to navigate the crisis.
However, Zimbabwe has been indifferent to the advice given by the AfDB president Akinwumi Adesina, former Mozambican leader Joaquim Chissano and representatives from the Paris Club group of creditors.
All these have underscored the importance of rolling out key reforms. The abhorrence to introduce sweeping changes has, over the years, also derailed the successful implementation of the Staff-Monitored Programme (SMP), which is a casual agreement between the IMF and a country's authorities to monitor the implementation of economic programmes.
A fresh SMP will be initiated in January next year. Notably, the US, which pulled out of the debt clearance dialogue in the aftermath of the 2023 disputed elections, emphasised that Zimbabwe was lagging behind in terms of embracing reforms. In clear terms, the US noted in a statement: “Recently released independent assessments of the dialogue’s governance indicators demonstrate much work remains to be done, particularly on judicial independence, freedom of association and assembly, and civil society space.
“Similarly, there is only modest progress to note in the land reform or economic tracks.”
Zimbabwe must not be its own enemy by ignoring sound advice from the dialogue partners. The country should simply reform or sink in debt.