Zimbabwe must declare HIPC status, recommends Tony Hawkins

IN an interesting twist of events which could probably rile local politicians, prominent economist and University of Zimbabwe (UZ) Business School Head, Professor Anthony Hawkins, says Zimbabwe should bite the bullet and declare itself a Highly Indebted and Poor Country (HIPC).

Hawkins said this would, however, not go down well with politicians who were not telling "each other and the world" the truth.

"Zimbabwe must declare itself a Highly Indebted and Poor Country (HIPC)," Hawkins said in Harare.

"We will, however, have to bite the bullet sooner rather than later. But our politicians say we are not poor because we are rich with lots of mineral wealth such as diamonds."

Diamonds were recently discovered to be awash in Chiadzwa Communal Lands and Finance Minister, Tendai Biti, says the diamonds could earn the cash-strapped nation about US$600 million annually for his empty coffers.

He has already pledged this amount for various projects including US$30 million for the forthcoming elections and referendum.

Declaring a country and HIPC status would mean several benefits for the nation but politicians including Minister Biti says this is out of the question.

"Declaring ourselves and HIPC country is already out of the question," Biti told journalists in Harare when he launched the country's debt repayment strategy.

The strategy shows and is meant to inform international creditors how Zimbabwe intends to give back outstanding cash to them.

As at the end of December 2010, Zimbabwe's unvalidated external debt positition was estimated at US$6,9 billion, of which almost US$4,8 billion was accumulated arrears.

Minister Biti said this amounted to about 103 percent of Gross Domestic Product (GDP) and about 72 percent of GDP, respectively.

"There are four major issues that Zimbabwe must deal with for its economy to get back on track," Hawkins said.

"We must deal with our balance of payments position and stop importing so much.

"We must deal with our huge and soaring debt. We must also deal with the imbalance between consumption spending and savings and investment.

"We must also make attempts to restructure our economy. How can we call ourselves capitalists without capital. No country can call itself capitalist when there is no capital and this is the case with Zimbabwe."

Professor Hawkins said the sustained rate of about 7 percent "won't be possible".

""There will be recovery and not growth," Hawkins said. "We are getting better but getting better far too slowly though.

"Those who favour the GNU (Government of National Unity) probably are overlooking the economic paralysis that will result thereafter."

The GNU came into place after the country's economic malaise in 2008 when hyperinflation took centre stage and there was political unrest in the nation.

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