Dublin Core
Title
PUBLIC DEBT SERVICING IN ZIMBABWE: CHALLENGES AND IMPLICATIONS
Creator
KEITH TICHAONA TASHU
TAFADZWA MOYO
Description
Zimbabwe has been classified as being in debt distress and government debt has risen
substantially from just over 48% of Gross Domestic Product (GDP) in 2013 to an estimated
82% in 2017. Large fiscal deficits experienced by the country have partly been the result of an
elevated public wage bill, which continues to absorb more than 80% of revenue in the country.
More so, the deficits have also been financed through an overdraft facility at the Reserve Bank
of Zimbabwe (RBZ) bailouts of state-owned enterprises, and widespread mismanagement of
public funds. Zimbabwe is officially burdened with public debt of approximately US$17.5
billion of which US$14.043 billion is external debt stock alongside ZWL$2.235 trillion worth
of domestic debt. The total Public and Publicly Guaranteed (PPG) debt increased by 27.5%
from 2021 figure of US$13.722 billion which is an unusual increase in a single year only. This
research examines challenges associated with debt servicing in Zimbabwe as well as
implications of unsustainable public debt. Some identified challenges exacerbating public debt
include lack of compliance by the government with legislative provisions on borrowings,
public debt defaults, misappropriated public debts and fragmented public debt institutional
framework. High debt creates uncertainty, deterring investment and innovation, and has a
negative impact on economic growth. Unsustainable debt burdens compel governments to
spend more on debt servicing and less on public service delivery. It is therefore recommended
that, the government needs to establish a clear legal and organisational framework on public
debt, expand the revenue base and debts auditing.
substantially from just over 48% of Gross Domestic Product (GDP) in 2013 to an estimated
82% in 2017. Large fiscal deficits experienced by the country have partly been the result of an
elevated public wage bill, which continues to absorb more than 80% of revenue in the country.
More so, the deficits have also been financed through an overdraft facility at the Reserve Bank
of Zimbabwe (RBZ) bailouts of state-owned enterprises, and widespread mismanagement of
public funds. Zimbabwe is officially burdened with public debt of approximately US$17.5
billion of which US$14.043 billion is external debt stock alongside ZWL$2.235 trillion worth
of domestic debt. The total Public and Publicly Guaranteed (PPG) debt increased by 27.5%
from 2021 figure of US$13.722 billion which is an unusual increase in a single year only. This
research examines challenges associated with debt servicing in Zimbabwe as well as
implications of unsustainable public debt. Some identified challenges exacerbating public debt
include lack of compliance by the government with legislative provisions on borrowings,
public debt defaults, misappropriated public debts and fragmented public debt institutional
framework. High debt creates uncertainty, deterring investment and innovation, and has a
negative impact on economic growth. Unsustainable debt burdens compel governments to
spend more on debt servicing and less on public service delivery. It is therefore recommended
that, the government needs to establish a clear legal and organisational framework on public
debt, expand the revenue base and debts auditing.
Publisher
Zimbabwe Journal of Business, Economics and Management
Date
2023
Position: 1 (85 views)