Economists on national debt

economy_realHARARE - With the inclusive government holding discussions a fortnight ago on how to manage its huge external debt, ....

economic commentators are divided over strategies to deal with the US$5.7 billion deficit.

Some economic commentators believe the government needed to consider the Highly Indebted Poor Countries (HIPC) initiative as a viable option out of the debt trap.

Others, however, said the government should place the country’s mineral resources on new capital markets so that the resources could be bought to write off the external debt.

HIPC are developing countries with high levels of poverty and debt overhang which are eligible for special assistance from the International Monetary Fund (IMF) and the World Bank. At the moment about 40 countries are classified as part of the initiative.

The Zimbabwe National Chamber of Commerce (ZNCC) deputy president, Trust Chikohora, said there were no prospects that the country would settle its external debt

unless the country was declared a HIPC.

“As ZNCC, we have not yet sat down to make an official position the government should take to effectively manage the external debt. However, personally I suggest that the country needs to be declared an HIPC so that the external debt is written off,” he said.

Ambassador Chris Mutsvangwa said it was imperative for the country to place its vast resources on the market for rights from capital markets.

“Our vast natural resources have value on the international market and in order for the government to write off its external debt it is imperative for us to place some of our assets like platinum on new capital markets such as Russia, South Korea, Brazil among others to retire our way out of the debt,” he said.

Economist, Witness Chinyama, said it was too early for the government to adopt the HIPC strategy.

“For us to adopt HIPC, it means that the country has become insolvent and bankrupt hence it can be taken to the IMF or World Bank. At this stage l don’t think it is advisable to take that route because we are endowed with vast minerals that we can exploit to settle the external debt. For example, we can extract diamonds in the Marange area of Chiadzwa,” he said.

Chinyama said the parastatal reform exercise was also another move that the government could adopt to consolidate the entities’ viability and become viable enough to generate part of the revenue to settle the debt.

Post published in: Agriculture

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