Debt vulnerabilities weighing down developing countries

Oliver Kazunga

Senior Business Reporter

DEVELOPING countries are grappling with increased debt vulnerabilities and this is hindering development and industrialisation in Southern Africa Development Community (SADC), Finance, Economic Development and Investment Promotion Minister has said.

Addressing delegates at the Southern Africa Development Community Industrialisation Week (SIW) and Investment Conference in Harare this morning, Prof Mthuli Ncube said:

“It is apparent that developing countries are grappling with heightened debt vulnerabilities as indicated by subdued solvency and liquidity indicators,” he said.

“In this regard, debt restructuring initiatives and more effective implementation of debt relief programmes such as the G20 framework would free up financial resources which can be channelled towards industrialisation, drive economic progress and development.

“We have argued in other fora globally that the G20 framework needs to be reformed.”

Against this background, he said it was imperative to reform the global financial architecture to support the industrialisation agenda in the region.

“The global financial architecture is tilted against the developing countries from a low share of SDRs quotas that were extended by the IMF,” he said.

“Three years ago, Zimbabwe used to borrow at something like 8 percent per annum. Right now we are borrowing at about 12 percent and this has nothing to do with the credit rating of the country. Any other country can tell you a similar story.”