‘No new debt acquired on roads construction’

Tapiwanashe Mangwiro

Government did not borrow money to finance rapid infrastructure development witnessed in the past two months leading to the 44 SADC Summit held in Harare recently, according to the Ministry of Finance, Economic Development and Investment Promotion, permanent secretary, George Guvamatanga.

Speaking during a Zimbabwe Economic Society post mid-term budget review breakfast meeting on Wednesday, Guvamatanga noted: “As for the infrastructure you have seen just before SADC, some of the roads are actually part of the Harare-Chirundu and Harare-Kanyemba project, which have their own financing models and pre-existing contracts.

“We just took advantage of the existing contracts for the roads to be constructed quickly and be attended to and spruced up in time for the summit. The other roads that were not part of the contracts are Old Mazowe Road and Chairman Mao Boulevard Road.”

Guvamatanga further clarified that the roads that were not part of existing contracts were paid for to the tune of about US$150 million.

He emphasised that this spending did not require new debt, countering speculation that the Government had taken on additional loans to fund these projects.

“Most of those roads have been paid for or if not, there are working agreements there, so there is no debt there. If there is debt, then there are favourable agreements which have been agreed to with the contractors concerned,” Guvamatanga said.

This assertion comes amid growing concerns over past Government spending practices, which have often resulted in increased debt and inflationary pressures.

In previous years, the Government’s use of bullet payments of large, lump-sum payments had been linked to inflation surges, creating apprehension about the economic stability of such expenditures.

Economist, Tinevimbo Shava, on these developments said: “There are legitimate fears rooted in our past experiences where significant payments like these have led to inflationary pressures.

“The Government’s strategy to avoid new debt is commendable, but the economic history reminds us that caution is necessary. The bullet payments made in the past have shown us the potential for inflation and it is crucial that this time the situation is managed differently.”

Shava’s cautionary stance reflects a broader scepticism within the financial community.

Analyst Sharon Makina also expressed doubts, pointing out the Government’s track record of making promises that do not always translate into action.

“We have heard many statements from the Government that end up being the opposite of what happens,” Makina remarked.

“While the declaration of no new debt is positive, there is still scepticism as to whether the execution will match the rhetoric. The transparency and follow-through will be essential in gaining the trust of both the public and investors.”

In contrast, economist, Ian Wilson, commended Guvamatanga for the Government’s approach to infrastructure spending. He highlighted the advantages of the strategy, noting that avoiding new debt could help maintain fiscal stability in the long run.

“Guvamatanga’s statements are reassuring,” Wilson said. “The decision to fund these projects without incurring new debt is a positive step that could prevent further economic strain. Infrastructure development is critical for growth and doing so within the confines of existing resources is a smart move.

This approach could help stabilise the economy and build confidence among investors.”

Guvamatanga also mentioned that the Government’s spending was not limited to infrastructure alone.

He noted that while there has been a focus on road construction, the pace of these projects is expected to slow down in the fourth quarter due to the rainy season.

“Spending is not only for infrastructure,” Guvamatanga explained.

“We have other areas of focus, and as the rainy season approaches, construction will naturally slow down. We need to be strategic in our allocations and timing.”

The Government’s stance on infrastructure spending, coupled with their decision to avoid new debt, represents a significant moment in Zimbabwe’s economic management.

As the rainy season sets in and construction slows, the impact of these recent expenditures will become clearer, shaping the country’s economic trajectory in the coming months.

While the Government remains firm in its position, the mixed reactions from economists and analysts highlight the ongoing debate about the best path forward for Zimbabwe’s economy.

With the potential for both growth and inflation, the outcomes of these decisions will be closely watched by all stakeholders.