Online Reporter
AT $22,6 billion, the national debt is clearly unsustainable.
It is around 50 percent of the gross domestic product and three times larger than the 2025 national budget.
With the economy starting to struggle as the US and Europe imposed their illegal sanctions, the country fell into default about 25 years ago.
We acknowledge the hard work that the Government is doing to find a way out of this very difficult situation. In July 2022, President Mnangagwa appointed the then African Development Bank President, Mr Akunwumi Adesina, working with former Mozambican President Joaquim Chissano, to lead the Government’s negotiations with the country’s creditors, among them the World Bank and Paris Club.
They have had multiple high-level meetings.
We now wait to see what authorities and the creditors will specifically agree on as a strategy towards sustainable debt resolution.
A few months ago, Finance and Economic Development Minister Professor Mthuli Ncube floated an idea to anchor the national debt resolution and arrears clearance strategy on the country’s natural resources, primarily minerals.
Last week, the Speaker of the National Assembly, Advocate Jacob Mudenda, amplified what he lauded as a “bright” idea, which, he said, can unlock billions in upfront payments to enable the Government to pay off the debt without squeezing the fiscus.
“At one stage, the minister (Prof Ncube) indicated that we might use our natural resources. I thought that was a bright idea,” said Adv Mudenda.
“For example, we put aside five rich gold concessions and allow some external investors to do extensive exploration and give them a tax break of, say, 30 years — they do not pay any royalties but pay in advance the value of what that concession is. — If, for example, that mining concession area is going to be mined for 50-70 years, we can come up with a figure, say, of $20 billion and ask them to pay. Some of these Asian or Arab countries can raise such money, and whether we can pay our public debt and the balance, make it as part of our sovereign wealth fund.”
Given the tight fiscal conditions and the difficult economic environment the country is experiencing, we agree with Adv Mudenda and Prof Ncube before him, that a resources-based debt resolution model is a bright idea indeed.
This is a novel proposal that has the potential to attract investment into the resources sector, create thousands of jobs, improve the social conditions of our people, result in infrastructure development, while generating enough resources for the Government to pay off its obligations.
It might not be really as simple as we think, but we don’t see much difference between Adv Mudenda’s proposal and the build, operate and transfer model, which helped us build the Plumtree-Bulawayo-Gweru-Harare-Mutare highway.
However, we urge the Government to, if it decides to go that route, put together a strong team of patriotic, smart, and spot-free negotiators, who will clinch a winning deal for their country, not one that will amount to us mortgaging our wealth over the $22,6 billion debt.
