The failure by the 2012 National Budget to come up with solutions to deal with external debt shows the inclusive government has no strategy in place, former Finance minister Simba Makoni said.
Makoni, who is the interim president of Mavambo/Kusile/Dawn, also said lack of provision of finance for major infrastructure projects like Kunzwi Dam and Zambezi Matabeleland Water Project was worrisome.
“The minister’s silence shows he had no plan to deal with our national debt, but I am sure our creditors are waiting to hear from us,” said Makoni.
“There was no discussion of any engagements with creditors on current debt and future financing.”
Zimbabwe’s national debt is said to be more than $7 billion, outstripping the country’s GDP which is estimated at just over $6 billion.
The external debt has continued to grow as a result of new payment arrears, interest and penalty charges.
In June the International Monetary Fund said the country was in “debt distress” with a large and unsustainable external debt stock which represented 118% of GDP at the end of 2010.
At the end of last year the government approved the Zimbabwe Accelerated Arrears, Debt and Development Strategy whose main objective is to facilitate re-engagement of all creditors and the international community on arrears clearance, a comprehensive debt relief programme and mobilising new financing, but little progress had been achieved thus far.
He said upward adjustments of mining royalties will increase the cost of doing business and would have a negative effect on the performance of the economy.
Finance minister Tendai Biti failed to justify why he had increased mining royalties.
“There has been no explanation or justification for the raise,” said Makoni.
“This is a wrong move by Minister Biti to increase the cost of doing business in our country while other countries are trying to reduce it.”
Royalty on gold and platinum were increased from 4,5% and 5% to 7% and 10%, respectively in move Biti said would maximise the contribution of mineral resources to the fiscus.
Makoni said while the budget projected economic growth there was no explanation or justification of the assumptions to raise confidence in the feasibility in the growth of mining of 11,6% in 2012 yet mining was projected to spur GDP growth and job creation in 2012.
“We can look East, North or South. However, we cannot get Zimbabwe working again if we continue on the path to self-destruction,” said Makoni.