Govt debt soars to $8 trillion

ists say the debt will continue to increase on the government’s continued reliance on the local market for funds.
Government’s revenue from taxes is not enough to cover its bloated expenditure.
The debt had opened the year at $175 billion. Government also need funds to
import maize, fuel, wheat and power that are all in short supply.
 The new debt levels mean that with an estimated population of 13 million, every citizen currently owes $615 384,61 to the local financial sector. Most Zimbabweans live below the United Nations poverty benchmark of US$1 per day.
“Outstanding treasury bills accounted for 99,3% of this amount while interest payments accounted for 75,4% of total debt,” the bank said.
The increasing government debt raised fresh fears of a renewed turbulence in
the crisis-sapped economy, battling high inflation currently topping 4 530%. Independent economists however said the current inflation was above 10 000%.
High interest rates have helped swell the level of domestic borrowings forcing
government to restructure its debt early this year.
As the debt continues to rise annual broad money growth (M3) rate for May rose
to 7 134,9% an increase of 2 923,2 percentage points from 4 211,7% recorded in
April.
This represents a rise in broad money of $10,7 trillion from $146 billion in May 2006 to $10,6 trillion in May this year.
“On a monthly basis, broad money increased by $5,8 trillion in May compared to $1,6 trillion in April. Growth in narrow money was largely due to an annual expansion of currency in circulation of 10 204,7%,” the central bank said.
Annual narrow growth increased to 8 443,8% from 4 819,2 April 2007. On a monthly basis, narrow money rose by 135,7% to $8 276,3 billion in May this year.
“Year on year growth in quasi money stood at 4 690,4% up from 3 120 the previous month. Monthly quasi money grew by 82,8%. The growth in money supply was largely due to an annual expansion of currency in circulation of 10 204,7%.
“Annual growth in domestic credit continues to be mainly driven by lending to the private sector which grew by 14 903,1% lending to government 4 119% and credit to public enterprises 947,9%,” said the bank. – Own Correspondent