Don’t borrow to offset debt, Govt told
THE Zimbabwe Coalition on Debt and Development (Zimcodd) has urged the government to heed International Monetary Fund (IMF) which recently warned against borrowing to finance another debt.
In addition to slamming the government for failing to implement reforms meant to address external debt, to improve the foreign exchange market and to promote international re-engagements, the IMF also attacked the government’s tendency to offset debt through borrowing.
Zimcodd executive director Janet Zhou, who said the damning report did not come as a surprise, told the Daily News the IMF’s honest assessment of Zimbabwe mirrored what the local civil society organisations had been saying all along.
“It is only unfortunate that the government will give heed to the IMF assessment yet this is what civil society organisations have been pointing out.
“The IMF warned against borrowing to finance another debt and the government is known for that. Borrowing to finance debt only means rescheduling but it does not clear the debt itself.
“The debt will only mature at a later date which means that it does have intergenerational consequences as future generations will shoulder debt owed by another generation. This should be a wake-up call for government to address the deficiencies,” said Zhou.
In their report, IMF said Zimbabwe is facing an economic and humanitarian crisis exacerbated by policy missteps and climate‑related shocks, adding that these would require difficult policy choices from the authorities and support from the international community.
IMF directors urged the authorities to make a concerted effort to ensure economic and social stability through the adoption of coordinated fiscal, monetary and foreign exchange policies in tandem with efforts to address food insecurity and serious governance challenges.
They also emphasised the importance of reengagement with the international community to support efforts to achieve economic sustainability and address the worsening humanitarian crisis.
Meanwhile, economist Carren Pindiriri said the tone of the IMF is clear that the Transitional Stabilisation Programme (TSP) introduced by government in 2018 failed to stabilise the macro-economy which was its main priority.
“The IMF report suggests that it is no longer in agreement with how government is implementing its policies as it indicated that the initially agreed stabilisation path is now off track. It is clear that IMF is losing confidence in policy makers,” Pindiriri said.