THE Zimbabwe Economic Policy Analysis and Research Unit (Zeparu) says the country’s debt to gross domestic product (GDP) ratio will balloon to 101,6% by year end due to legacy debt, farmers’ compensation and COVID-19.
This debt position does not take into account the legacy debts incurred by the Reserve Bank of Zimbabwe through compensation of some stakeholders for losses incurred following the currency conversion estimated at about US$1,2 billion and farmers’ compensation,” said Zeparu in its new May 2020 economic barometer.
“The public sector debt to GDP ratio including legacy debt and farmers’ compensation jumps from about 51,8% estimated for 2019 to a projection of about 101,6% in 2020, which is beyond the 70% debt threshold as espoused in the Public Debt Management Act (chapter 22:21) and the Transitional Stabilisation Programme (October 2018 – December 2020).”
Zeparu said the consolidation of debt statistics is, therefore, critical to ensure that the government publishes the correct debt position including legacy debts and farmers’ compensation.
“The current global pandemic COVID-19 may further affect the country’ ability to clear the long overdue external debt arrears due to disruptions caused by the rolling lockdowns and import and export restrictions as countries try to fight the spread of the disease,” Zeparu said.
