Peter Moyo
Zimbabwe’s national debt has ballooned to an eye-watering $21 billion in 2024, a staggering leap from last year’s $17.3 billion. This sharp rise is not due to new borrowing but is primarily the result of unpaid arrears and accumulating interest, warns debt expert Yollander Millin.
Millin, a Social and Economic Justice ambassador and a key figure with the Zimbabwe Coalition on Debt and Development (ZIMCODD), yesterday discussed the profound implications of Zimbabwe’s debt mismanagement. “Debt in itself is not inherently negative,” Millin stated. “It becomes problematic when not managed efficiently. The real issue is not the borrowing but the failure to service the debt on time.”
The roots of Zimbabwe’s debt crisis stretch back to 1980, when the country inherited a debt of roughly $50 million. Over the decades, poor repayment practices and mounting interest have drastically worsened the situation. “We are now sitting on a whopping $21 billion debt as of 2024,” Millin reported.
This escalating debt has severe repercussions for everyday Zimbabweans. Millin highlighted that high national debt correlates with diminished access to quality education, inadequate healthcare, increased poverty, high unemployment rates, and a rising cost of living. This is evident in the 2024 national budget, which has prioritized debt servicing over critical services like education and healthcare.
Since 2018, Zimbabwe has implemented austerity measures that include higher taxes and reduced domestic spending to address its debt crisis. However, these measures have compounded the economic strain by devaluing the local currency and constraining the government’s financial flexibility.
Millin also pointed out that Section 300 of the Zimbabwean Constitution grants the Minister of Finance extensive borrowing powers, contingent upon parliamentary approval. “It is crucial for citizens to demand transparency and accountability from our duty bearers,” Millin stressed. “We need to ensure that our leaders are effectively managing our national debt.”
The compounding nature of Zimbabwe’s debt further underscores the broader issue of financial mismanagement. Millin compared the debt situation to a compounding interest scenario, where overdue payments accrue increasingly severe penalties. “If you borrow $10 and miss the repayment date, you might owe 2% more. If you miss another deadline, that 2% accrues interest on itself, compounding the debt,” Millin explained.
As Zimbabwe grapples with its debt crisis, effective debt management and transparent governance are essential for stabilizing the economy and mitigating the extensive impact on its citizens.
