Zimbabwes debt – what the people should know

Zimbabwe Coalition on Debt and Development (ZIMCODD) recommends this in its programme to educate the Zimbabwes grassroots on the countrys debt. The Coalition said government should prioritise an urgent review of the current legal framework and systems governing public loan and debt management as the first step in formulating a debt sustainability framework.

One way of achieving this was to ensure the executive powers of the Minster of Finance and the Presidency be limited to ensure accountability, transparency and depersonalisation in public business and the administration of state matters.

“Parliament must approve all borrowing and there should be a consolidated law on getting loans and debt management,” it noted.

It said Parliament’s capacity in issues of public finance management must be built so that it avoids rubber stamping proposals without carrying due diligence.

Debt audit

It also recommended the establishment of a Public Debt Commission and the need to conduct an official debt Audit.

“There is need for an audit of all Zimbabwe debts so that this informs the debt strategy that is to be pursued. This commission should utilise the doctrine of odious and illegitimate debt, and recommend the repudiation of any past loans which fall in this category. Any contracts and agreements that involve such debts and liabilities should therefore be amended or cancelled. Relevant, contextually appropriate changes to debt management policies will be informed by a debt audit.”

It called on for a stronger Office of the Comptroller and Auditor-General. “The law should give this office strong powers, with protection similar to that afforded to judges. Furthermore, the selection, nomination and removal of the Comptroller and Auditor-General by the President be subjected to confirmation by Parliament. This office should be able to audit all accounts. Nothing should prevent any accounts from being audited, even if they raise national security issues. The reports from this office should be easily available to the public.

There is need for legal provision that requires the government to consult civil society groups and project beneficiaries before borrowing from external sources to ensure that the development priorities outlined in loan agreements reflect the aspirations of the people.

There should be the involvement of Parliament, the Public Accounts Committee (PAC) and possibly that of another body such as a Public Debt Commission which actually has definitive power in acquiring loans. The borrowing and repayment procedures of these entities must be reviewed to reduce the levels of public liability. Periodic reports to Parliament must be made binding on such entities and their respective Ministries.

Loans and their terms and conditions must be publicised in the Gazette and national newspapers before the contract is signed. Both creditor and debtor should guarantee transparency. ZIMCODD said for as long as a country used its borrowed capital for other purposes than productive investment, debt was created. “Used productively, sustainable economic development will be the result and consequently, prosperity, and better fulfilment of the human rights of the populace,” it said.

It also recommended the monitoring and clamping down on tax evasion and corruption. “A transparent and progressive tax system with no loopholes will reduce the need to borrow externally as the country earns more from economic activities.”

ZIMCODD is a socio-economic justice coalition established in February 2000 to facilitate citizens’ involvement in making public policy and practice pro-people and sustainable. It views Zimbabwe’s indebtedness, the unfair global trade regime and lack of democratic people-centred economic governance as root causes of the socio-economic crises in Zimbabwe and the world at large.

The Citizens’ Guide on Understanding Debt was originally published in 2003 as the first of three pamphlets focusing on the public debt. It was the first in the series which included: Understanding debt, the Social effects of debt and Developing an Economic Justice Movement.

The publishing of a second edition comes at a critical juncture in the country’s history, and ZIMCODD’s existence as a coalition focusing on debt.

The country is in a delicate political transition to a power sharing government after years of deep political, economic and social crisis, which hit vulnerable groups such as workers, people living with HIV/AIDS, women and children.

The government has initiated various programmes to revive the economy for a new beginning to take place. Unfortunately, the country cannot generate all these resources internally in the short term, hence the need for external funding.

However, Zimbabwe is saddled with an unsustainably high level of debt, estimated to be in the region of US$5,7 billion owed to various multilateral and bilateral creditors.

Debt debates leaving out the grassroots

ZIMCODD is worried that current debates on the best debt sustainability framework are tending to proceed at a purely technocratic level leaving out the voices of the grassroots. “Publishing an updated edition of this grassroots manual is ZIMCODD’s way of taking this debate back to the people, to raise their level of economic literacy, and start a process of including the views and participation of marginalised communities, ” said Dakarayi Matanga ZIMCODD Executive Director.

“This is also a process of ensuring any proposals and solutions on Zimbabwe’s debt remain firmly grounded in principles of social and economic justice.”

“The launch of this booklet also coincides with ZIMCODD’s 10th anniversary. We pay a heartfelt tribute to all the activists, researchers, academics, organisations, and partners who laid the foundation for a vibrant coalition on social and economic justice in Zimbabwe.” ZIMCODD said African countries should ensure that real solutions to the debt crisis were firmly grounded in principles of social and economic justice and offer a permanent exit.

While organisations like the World Band and the International Monetary Fund (IMF) dominated the global financial system with pervasive impacts on human development, there was no corresponding global governance structure to protect the interests of the weak. “Many poor countries end up devoting huge portions of their national budgets paying back foreign creditors at the expense of delivering on the well-being of their people.

“Social indicators are therefore declining whilst interest payments on debt increase. A democratic or rights-based framework for resolution of the current debt crisis is therefore necessary. ” Persistence of the debt crisis faced by severely indebted low-income countries and the inability of the international community to find both immediate and sustainable solutions, has raised concern, leading to debates over various strategies on the debt.

“However, the solutions currently promoted by creditors to deal with the crisis exacerbate the problem and do not offer a permanent exit from debt. It is clear that most approaches are actually abstract means of giving more relief to the creditors themselves than the debtors by ‘recycling debt’,” said ZIMCODD. As a social and economic justice network focusing on the debt problem, ZIMCODD would like to contribute constructively to policy debates in search of a lasting solution to the country’s debt problem.