ZIMBABWE’S central bank should stop securing loans at usurious interest rates from the African Export and Import Bank (Afreximbank) to contain the country’s ballooning external debt, a leading business organisation has said as the country’s re-engagement with international financial institutions (IFIs) goes off track.
With no budgetary support from multilateral creditors due to a debt overhang, Zimbabwe has shifted its focus to short-term debt instruments and facilities from regional lenders such as Afreximbank.
The Zimbabwe National Chamber of Commerce (ZNCC) has however warned that continued dependence on costly loans instead of pushing for re-engagement with IFIs which offer concessionary funding would hurt the economy.
“There is need to exit from the costly Afreximbank loans,” the ZNCC said in a research note.
“…Zimbabwe will not return to sustained economic growth without international re-engagement and a resolution of the country’s foreign debt crisis. It is idle to pretend otherwise, as in both the budget and the MPS (Monetary Policy Statement).”
The ZNCC added that the central bank should provide more disclosures on offshore loans as taxpayers continue to bear the brunt of government borrowings.
According to the International Monetary Fund, Zimbabwe is one of six countries in sub-Saharan Africa classified as being in debt distress. The other countries are Chad, Republic of Congo, Eritrea, Mozambique and South Sudan.
“It is time for the central bank to tell things as they are – not how government likes to think they are. It should seek to inform, not mislead. It is a shame that the courts have to force the RBZ (Reserve Bank of Zimbabwe) and government to release details of offshore loans, which the taxpayer will have to repay. These are sovereign liabilities and should reflect the sovereignty of parliament, where they should have been tabled as required under the constitution,” the ZNCC said.
“There is no budget surplus in any meaningful sense.
“What does a budget surplus mean when a country cannot pay its UN membership dues? Or when the state of the roads is declared to be a national emergency? Or when the health system is under massive stress with hundreds of trained doctors and nurses having sought employment elsewhere because of working conditions and remuneration in the public health sector? Or when the authorities cannot finance imports of vaccines, let alone the rollout of a vaccination programme?”
Despite the optimism within government that the economy will rebound this year on the back of improved agricultural output, experts say a real turnaround in Zimbabwe could take years, if not decades, given the depths to which it has sunk.
The road and rail networks have largely collapsed, taps have run dry in major cities and the health system is barely functional.
The Covid-19 pandemic has compounded the nation’s woes, with hospitals overwhelmed by an influx of patients during a second wave of infections last month.