By Owen Dhliwayo/Michelle Chifamba
Zimbabwe’s public and publicly guaranteed (PPG) debt situation has been deteriorating, with the total PPG debt increasing by 1.7% to USD18 billion from USD17.7 billion. This deterioration highlights the country’s persistent fiscal challenges and raises concerns about the Zimbabwean ability to manage its debt burden.
This continued upward trend in debt stock suggests that Zimbabwe’s debt is on an unsustainable path, posing risks to economic stability. At the same time, it will likely exert pressure on the government’s finances, potentially diverting resources away from essential public services.
“Official debt statistics are often not transparently reported as the Treasury has reportedly shared varying debt stock with creditors, proving figures between USD19.2 billion and USD21.9 billion,” reports ZIMCODD.
The report is of the opinion that transparent and reliable debt reporting is crucial for ensuring informed decision-making, accurate risk assessment, and maintaining investor confidence. Therefore, the lack of transparency in Zimbabwe’s debt reporting underscores the need for improved debt management practices thereby promoting economic stability and sustainable growth.
The second republic has been vocal about Vision 2030, an ambitious plan that aims to transform the country into an upper-middle income economy by 2030. However, the country’s public and publicly guaranteed debt situation poses significant challenges to achieving the principles of Vision 2030.
The ZIMCODD Monthly Economic Review for June 2024 was made against the backdrop of a new structured currency, the Zimbabwe Gold (ZiG), and the subsequent revision of the 2024 economic growth forecasts by 1.5% to 2% from 3.5% due to the impact of the El Nino-induced drought on the economy.
However, the report suggested that the new structured currency’s performance was underpinned by the stellar performance of gold prices on the global markets. Nevertheless, this is likely to be short-lived as burgeoning informality, rapid dollarization, rising public debt and servicing costs and high perceived public corruption are among the risks facing the new structured currency and the general performance of the economy.
