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Effective debt management must be a priority in tackling national economic recovery agenda
Zimbabwe Coalition on Debt and Development (ZIMCODD)
October 02, 2008

The Zimbabwe Coalition on debt and Development (ZIMCODD) notes with cautious optimism, the recent historic signing of an agreement between ZANU (PF), MDC (T) and MDC (M) in September 2008, facilitating the arrangement to form an all-inclusive government. We hope that that this agreement sets the political framework for economic recovery and meeting social needs. We take this opportunity to make our position clear on the management of national debt and development, in the context of this political development.

Zimbabwe's indebtedness and aid flows

We expect the new government to consider effective debt management to be a priority in tackling the national economic recovery agenda and beyond. Currently the external debt of Zimbabwe is proportional to the size of its economy. According to Joint External Debt Database of the IFIs (IMF and World Bank) the external debt was USD 4.9 billion at the end of 2007. Zimbabwe is now one of the few countries with such a high and unsustainable level of indebtedness. Almost half of that debt can be traced from the Rhodesian government during the 1970s. Secondly, almost a quarter of that debt is due to Apartheid destabilisation acts in the 1980s, because government had to borrow to strengthen itself to fight off these disturbances. Thirdly, the last quarter of the external debt originated from IFI lending during the 1990s, based on the disastrous Economic Structural Adjustment Programme (ESAP). In this view, we call for an official audit of the external debt to establish the nature and legitimacy of debts owed by Zimbabwe.

After the power sharing agreement is implemented, it is likely that the political leadership will look forward to a massive injection of external resources into the country to reboot the economy, given the prevailing humanitarian and economic crisis. Various donor countries, multilateral agencies and other institutions have already made pledges of aid to Zimbabwe in the new dispensation. The new government must reveal the nature of this aid to avoid ambiguities associated with the relationship between current aid flows and new loans that will add to the already huge debt stock of the country. For a new beginning to take place for the Zimbabwean economy, the donor countries must cancel the debt unconditionally instead of creating more debt. Unconditional debt cancellation can free billions of dollars for social services, sustainable development and decent livelihoods. Any new aid inflows should add to economic development and not to indebtedness.

Quality of social services

The decline of the economy has been characterized by a corresponding collapse in social service delivery, with vulnerable groups such as workers, people living with HIV/AIDS (PLWHAs), women and children being hardest hit. The problems of access to clean water, skills flight in local medical and health institutions, poor infrastructure development and maintenance, shortages of equipment for delivering amenities and other related problems, vividly illustrate the current poor state of social services. The genesis of this social decline can be located in the implementation of neo-liberal policies linked to ESAP, which left a legacy of increasing poverty, high unemployment, and a decline in health and educational standards amongst other things. The reason for this is that the IFIs with the compliance of the government liberalised and deregulated the economy through the commodification of social services including the implementation of massive cutbacks in expenditure in the mentioned areas.

The new constitution

We expect the new constitution proposed in the power sharing agreement to specify people's Social and Economic Rights in its Bill of Rights. Social and economic rights, which are based on principles of social justice and public obligation, will ensure that the rights to food security, health, education, housing, basic public utilities, transport, decent work and a living wage are enshrined in the constitution. Furthermore, it should give Parliament and civil society guaranteed, meaningful participation in any future loan contraction processes and management. Lastly, we demand that the constitution should place limits on debt servicing in relation to the social spending.

Role of civil society in economic stability

The agreement provides for the establishment of a National Economic Council composed of productive sectors and other relevant stakeholders. We hope that the proposed council will result in the inclusion of a broad spectrum of representative groups, to give civil society meaningful participation in the formulation of national development strategies.

We in civil society demand the end to the inherent bias in favor of the business sector over other organized civic sectors, in regards to consultations over matters of economic management.

We hope that the new, inclusive government will create space and structures for meaningful engagement with civil society on these and other issues.

Visit the ZIMCODD fact sheet

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