Zimbabwe Loses Money Borrowing Credibility

Zimbabwe Loses Money Borrowing Credibility
Published: 2016 August 10 04:44:45 (2498 Views)



Zimbabwe's money borrowing capabilities have dropped to a very low state, with potential investors shying away from the economic ravaged country.

Speaking at the launch of the United Nations Conference Trade and Development Economic Development in Africa Report 2016, Debt Dynamics and Development Finance in Africa, Africa Capacity Building foundation (ACBF) director Thomas Munthali said Zimbabwe is among the nine countries on the continent who are in serious debt distress.

“Before 2006 – 2009, over 30 percent of Zimbabwe’s external debt was concessionary, but as of now cheap debt has become lesser and will aid debt distress for low income countries,” he said.

Concessionary debt refers to lending extended by creditors at terms below market terms with the aim of achieving a certain goal and with Zimbabwe’s current external debt amounting to over $9 billion, the country is not in a position to attract funding at favourable terms. The country’s debt is largely as a result of arrears to multilateral lenders such as the IMF, World Bank and African Development Bank.

Munthali said the gross domestic product growth rate has been growing below the debt level rate, compounded further by declining commodity prices and other economic fundamentals.

“Current account deficit levels will increase the level of debt distress,” he said.

The African Development Bank, estimates that the country’s GDP growth is projected at 1,6 percent at close of the year on the back of anticipated expansion in three sectors, including the financial industry.

According to the UNCTAD report, African governments need to add new revenue sources to finance their development such as remittances and public private partnerships and clamping down of illicit financial flows.

The report says Africa’s external debt ratios appear manageable, but African Governments must take action to prevent rapid debt growth.





- Herald
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