ZIMCODD’s proposed remedy to Zim domestic and external debt

The declaration was launched by the Zimbabwe Coalition on Debt and Development (ZIMCODD), a social and economic justice coalition focusing on debt and development in Zimbabwe, and undersigned social movements, CSOs, trade unions and other related organisations within and outside Zimbabwe expressing solidarity with them and expresses the organisations concerns and recommendations on Zimbabwes mounting domsetic and intrenational debt.

The statement is part of local activities to launch the annual Global Week on Debt and IFIs, also known as ‘Debtweek’ locally. Debtweek is a week of citizens actions and mobilisations worldwide, around the issue of unsustainable public debt and its negative impacts on the citizens and economies of poor countries globally.

We are commemorating the inaugural Debtweek in Zimbabwe with the theme, Responsible Lending and Borrowing to Guarantee Peoples’ Social and Economic Rights Activities fall at a time that marks a decade of struggle by organised civil society in Zimbabwe against the challenges posed by the economic and social crisis prevailing in the country in the past decade, underscored by the country’s growing indebtedness, said ZIMCODD in a statement last week.

Our studies show that citizens incur huge costs as payments on the principal, interest and penalty charges to national debt are made at the expense of expenditure on social sectors and rehabilitating infrastructure. Furthermore, it has become clear that the legal framework of the public loan contraction and debt management systems in Zimbabwe do not ensure transparency, accountability and inclusiveness in their current form. This is mirrored in studies of other countries which clearly show that internal mechanisms have had just as significant an impact on Africa’s debt crisis as external factors have had. Weak internal mechanisms are also linked to the growth of domestic debt.

Reports that Zimbabwe cannot move forward if it does not deal urgently and effectively with the external public debt, projected to grow to US$7,6 billion by the end of 2010, whilst domestic debt will increase to US$1 billion in the same period, are distressing for citizens desperate for a new beginning, according to the organisation. ZIMCODD called on creditors to take into account their own multilateral development commitments, such as the Millenium Development Goals (MDGs) and international protocols that guarantee the social and economic rights of the people in dealing with Zimbabwes debt and to introduce a moratorium on debt service, to arrest the growth of interest payments and penalties on the debt which is unpayable because of the current state of the Zimbabwean economy.

This should be followed by a Parliamentary audit of current debts. We also reiterate that debt relief programmes such as the Heavily Indebted Poor Country Initiative (HIPC) are no substitute for total debt cancellation. The coalition said the recently signed Public Finance Management Act Chapter 22:19 which enhances effective and responsible economic and financial management by Government on a broad range of issues has very little advantage on its predecessor where loan contraction and debt management is concerned, recommending the introduction of amendments which ensure transparency, accountability and inclusiveness.

The proposed amendments should ensure that Parliament is guaranteed meaningful participation in the loan contraction and debt management process, while consultation with the Budget, Finance and Economic Development Portfolio Committee would be appropriate.

This committee could be empowered to make an objective determination and bar the loan if need be, based on specific criteria. Parliamentary power must also be improved by ensuring that it approves loan guarantees before they are given. Loans and their terms and conditions must be publicised in the Gazette and national newspapers before the contract is signed.

Projects that are funded by debt must be subjected to constitutionally guaranteed citizen input and prior financial, social, environmental and poverty reduction analysis. Loans for projects that violate economic, social and cultural rights must be barred. The functions of the newly created Debt Management Office (DMO) must also be explicitly captured in the Act.

Ultimately we urge the Government of Zimbabwe to convene a conference with its creditors to discuss a realistic assessment of the country’s debt sustainability under the prerogative of a fresh start for Zimbabwe’s economy.

The petition also encourages Parliament to establish a Public Debt Commission and conduct an Official Debt Audit to inform the future debt strategy.

This commission should utilise the doctrine of odious 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.

We also encourage Parliament to build its capacities in issues of public finance management so that it avoids rubber stamping loan proposals without carrying out due diligence, in preparation of its enhanced oversight role in this area.