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ZAADDS:
Welcome policy framework to solve Zimbabwe's long standing
debt overhang
African Forum
and Network on Debt and Development (AFRODAD)
April 16, 2012
The launch of
the Policy framework document: Accelerated Arrears Clearance, Debt
and Development Strategy (ZAADDS), by the Inclusive government of
Zimbabwe on the 16th of March 2012, was a landmark event in the
history of the inclusive
government. ZAADDS is one among numerous important policy documents
this government came up with since birth in 2008. AFRODAD is proud
to have participated in the development of this key framework that
is premised to resolve Zimbabwe's debt overhang.
The Zimbabwe
Accelerated Arrears Clearance, Debt and Development Strategy (ZAADDS)
is a prudent initiative as it sets out the tone for effective financial
management, which is a key tenet for economic governance. It is
a consensus document within the inclusive government given the fact
that principals appended their signatures to the document preface
(His Exellence R.G.Mugabe) and preamble (Rt. Hon. M. R. Tsvangirai
Prime Minister). The consultative process towards its development
was speared by Honourable Deputy Prime Minister, Professor A. G.
O. Mutambara.
It is encouraging to
note that the principals agree that 'the non-resolution of
the debt issue amounting to US$6.9 billion has become a major impediment
to Zimbabwe's rapid economic growth' hence the need
to resolve it. ZAADDS is defined as a 'hybrid debt resolution
strategy which includes the adoption of traditional debt resolution
initiatives combined with leveraging of the country's natural
resources to achieve sustainable economic development'. ZAADDS
key tenets are vital to achieve external debt sustainability.
The establishment of
and operationalisation of a Debt Management Office is commendable.
Zimbabwe Aid and Debt Management Office (ZADMO) should be grounded
on a strong institutional and legal framework, with a clear mandate
and authority to prudently manage debt. This is a strategic measure
that will see highly qualified personnel addressing the debt problem
from a well informed perspective.
Undertaking
a validation and reconciliation exercise of the external data-base
is critical in validating the nature, amounts, origins and legitimacy
of the debt claims. This is an endorsement to the previous clamours
by debt campaigners like AFRODAD, Jubilee South and ZIMCODD
to a Debt Audit. Audits essentially involve undertaking a meticulous
examination of the past. But they are also, and perhaps especially,
a means of mobilising citizens enabling them to gain a hold on the
present, to avoid the fatality of future debt, and to prevent its
indefinite perpetuation.
Re-engagement with creditors
and the international community is crucial at this moment thus negotiating
for arrears clearance, new financing and comprehensive debt relief
is urgent. The IMF's Extended Credit Facility outstanding
arrears amounting to US$140million needs to be settled. The Fund
acts as gatekeeper for all donors.
In as much as Zimbabwe
gears for external means of settling the debt, it is imperative
that "leveraging of natural resources" has been considered
as the best alternative domestic solution for debt relief and development.
In order to realise the intended objective, the policies to do natural
resources should address issues to do with management of proceeds
from natural resources, publication, disclosure and verification
of revenue and payments made to government by companies in the extractive
industry in order to improve transparency and accountability in
this sector.
AFRODAD recalls that
ZAADDS entails efforts by the government to implement a series of
reforms focusing on a number measures including reviewing national
tax laws. In this regard, it is essential that the custodians of
tax revenue review such policies whilst striking a balance between
investment incentives and revenue collection in order to harness
maximum possible revenue for development projects. It is understandable
that balancing fiscal take with willingness to pay is difficult
but taxation remains the major source of revenue for Zimbabwe and
other African countries especially those rich in natural resource
endowments.
The policy document however
falls short of mentioning the traditional debt relief initiatives
it builds upon. The Inclusive government has attempted in several
occasions to establish and implement sound macro-economic policies.
They developed a set of economic policies such as STERP 1 and 11,
Medium Term Plan for 2011-2015, and the Zimbabwe Accelerated Re-engagement
Economic Programme (ZAREP) and the fundamentals underpinning these
economic frameworks points to adoption of the unpopular HIPC debt
relief initiatives. If ZAADDS is the debt relief mechanism in place
then ZAREP is the economic framework that supports it.
This is the same scenario
with HIPC driven by Poverty Reduction Growth Facility (PRGF) now
Extended Credit Facility. ZAREP aims to establish a good track record
of implementing sound macro-economic policies, cut wage bills, budget
deficts, retrench civil servants, and privatise loss making parastatals.
Zimbabwe went through this in the 90s. How different will be the
impacts of these austerity measures this time around?
The successful
implementation of ZAADDS will largely depend on the political context
prevailing in Zimbabwe. Political context in Zimbabwe has helped
us to explain why the introduction of noble economic frameworks
and polices designed to resuscitate the ailing economy in the past
have failed. The political leadership should work together towards
achieving same vision of a debt resolution for Inclusive growth,
job creation and poverty reduction.
Visit the AFRODAD
fact sheet
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