As much as Sections 298 to 300 of the Constitution of Zimbabwe call for a fair spread of the taxation burden, there is also a need for a fair spread of the debt burden on an intergenerational basis. Lately, the Government of Zimbabwe has been on a borrowing spree, without following the duly aligned procedures set out in the constitution. Such illicit debt can have major effects on the welfare and wellbeing of generations to come. Hence this policy brief sets out a youth-centred framework for public debt engagement as the new way of national debt engagement.
The youth constitute over 60% of Zimbabwe’s population and are the major demographic group in the country. The huge public debt burden the country holds threatens the economic prosperity of the youth. Zimbabwe’s public debt consists of national and external debt. The national debt is the accumulated level of debt owed by the government of a country.
External debt is debt owed by the government, businesses and people of a country to overseas lenders such as banks, the IMF, foreign companies and other creditors.
Generally, a government’s debt as a percent of GDP is used by investors to measure a country’s ability to make future payments on its debt. This affects a country’s credit rating. According to the IMF, Zimbabwe’s unresolved debt, is over US$18 billion. Youths as the majority population of the country suffer a double tragedy because of the debt burden. The debt burden has a negative intergenerational effect which makes it difficult for youths to secure decent livelihoods and also diminishes the opportunities for growth in the future.
While not all debt is bad, the government needs to consult the youth who will be the most affected by debt acquired now and in the future. Moreso, the government should be guided by the provisions of the Constitution which govern public finance management set out in sections 298, 299 and 300 of the Constitution of Zimbabwe.
It is worrying to note that the executive has been accused of not adhering to these provisions with the High Court recently ruling (December 2020) that the Ministry of Finance must report the amount of money borrowed from the Afrexim Bank which has remained a secret. Many analysts and think tanks opine that the opaque nature of the debt accrued will only serve to increase public debt while there is little development being witnessed in the country.
Read the full report here (250KB PDF)
Source: Zimbabwe Coalition on Debt and Development