by Gift Mashoko

Minister of Finance and Economic Development, Professor Mthuli Ncube gave an in-depth detail on how Zimbabwe should continuously deal with debt as it is critical for people to understand debt sustainability.

In line with President Emmerson Mnagagwa’s re-engagement drive, Minister Ncube highlighted that at his recent visit in Kenya, he engaged with other countries on debt and restructuring issues in Africa. He said Zimbabwe was not the only country with foreign debt adding that he learnt how other countries were trying to deal with the debt crisis.

“We had deep engagements on the debt and restructuring issues in Africa. Zimbabwe is not the only country that is afflicted with this issue of foreign debt, but our debt is unique in the sense that our domestic debt is higher than the foreign debt. For the other African countries, their issue is a looming serious foreign debt as compared to domestic debt.

“We are all trying to resolve these issues. For us our issue is a liquidity issue and arears in terms of foreign earnings. For other countries they have a debt sustainability problem on the foreign front and that is dealt with a difference. We do not have a debt sustainability problem on the foreign front, we have a liquidity problem,” he said.

He highlighted ways through which Zimbabwe and other African countries can deal with their debt crisis. These include dealing with fiscal issues and fiscal consolidation and strengthening debt management capacity which is what is being done in Zimbabwe. The other way of dealing with debt crisis being to strengthen the debt sustainability analysis because there always has to be an analysis to ensure debt compliance in terms of debt sustainability.

Minister Ncube explained on how one can understand what debt sustainability is about.

“What is critical in understanding debt sustainability is the gap between growth and interest rate. What happened was that the growth in Africa slowed down after the fall in the oil prices after 2015 and that’s when the problem really started because suddenly the interest rates (because the African countries were paying on their foreign debt) started rising above the growth rate and that’s dangerous,” he said.

Professor Mthuli Ncube is on a re-engagement drive in line with President Mnangagwa as he looks for ways to revive the economy and making Zimbabwe an attractive investment destination.