A CIVIC society group has called on Parliament to craft a law on debt audits which they feel will curb unnecessary assumption, by the State, of debts emanating from corruption, illicit financial flows and general mismanagement of the economy.
Janet Zhou, the Zimbabwe Coalition of Debt and Development executive director, in her presentation last week during a high-level conference on debt said such legislation will ensure future borrowings by the country are informed and made after assessing their impact on human rights.
Currently, the country has a ballooning domestic and external debt hovering between $17 billion and $18 billion and poverty-stricken citizens have to shoulder the debt repayment through taxes.
“There is need for national legislation on periodic debt audits, starting with the current debt which is historic,” Zhou said.
“The Public Debt Audit legislation will assess the loan contraction process, use of loan funds, and the impact of debt on development and the realisation of human rights.”
She said some loans that Zimbabwe inherited were not necessary and were caused by corrupt individuals.
For instance, she said the $700 million debt accrued during the Rhodesian government era was meant to propel racial supremacy and did not benefit Zimbabweans.
Other debts that government incurred during former President Robert Mugabe’s era included the Reserve Bank of Zimbabwe Debt Act which took over $1,35 billion debts that were incurred by the Reserve Bank of Zimbabwe before December 31, 2008.
The Act was signed by Mugabe amid demands by opposition MPs that the list of debtors be published since it was suspected that political bigwigs were the main culprits.
Government, through the Zimbabwe Iron and Steel Debt Assumption Act, also took over Ziscosteel’s $500 million debt.
This was signed into law in May 2018 by President Emmerson Mnangagwa.
The Tendai Biti-led Public Accounts Committee is also currently seized with the issue of Zamco debts, and they have demanded a list of beneficiaries of the $1,13 billion non-performing loans taken over by the Zimbabwe Asset Management Company.
They suspect that political elites were the main beneficiaries.
Zhou said the negative implications of debt were poverty, inequality, lack of social development, and infringement of human rights such as the rights of women who are the ones that bear the brunt of economic decay.
“The results are that government will place austerity measures associated with debt repayment and re-arrangement processes which undermine the capacity of government to deliver social services. The poor then subsidise the debt obligations of private interest and austerity measures (such as) the 2% transaction tax are placed resulting in the poor paying more taxes,” Zhou said.
She said political will was needed to effectively enforce the laws governing public finance management such as the Public Finance Management Act.