Foreign debt remains Zimbabwe’s major drawback

By Stanley James, Business Editor

WHILE the diaspora community is expected to contribute towards national development through remittances and increased investments, experts believe that foreign debt needs to be addressed for the country to achieve its economic growth targets.

An unsustainable foreign debt, which was at around US$13 billion by September last year and now stands at US$19 billion, has emerged as the Achilles Heel in the country’s development trajectory.

Treasury statistics show that the huge proportion of the debt is owed to bilateral creditors, followed by the multilateral lenders such as the World Bank, African Development Bank and European Investment Bank, among others.

According to University of Zimbabwe Senior Economics lecturer, Professor Albert Makochekanwa, the huge debt overhang is a real threat to economic growth and can be traced back to 1980.

“The external debt overhang for the nation dates back to 1980 and it has ballooned as government borrowed to facilitate growth while ensuring the growth of the economy,” he said.

Treasury statistics also reveal that over US$44 million was directed towards servicing external arrears between January and September this year.

“It is not all that easy and this requires concerted efforts to the extent that everyone has to play the ball to ensure that such a huge external debt overhang is definitely extinguished,” added Makochekanwa.

Treasury is convinced that the huge debt overhang needs concerted efforts to facilitate economic growth.