Borrowing not a solution: Govt told

By The Standard | Apr. 11, 2019 | 2 Min read

ZIMBABWE should come up with sustainable ways of generating income and move away from piece-meal interventions that will sink the country into deeper poverty, Poverty Reduction Forum Trust director Judith Kaulem has said.

BY MTHANDAZO NYONI

Kaulem told a recent debt conference held in the capital that borrowing money would not help Zimbabwe move out of its economic mess.

Zimbabwe is currently sinking in debt, which has ballooned to more than $17 billion, with external debt taking up $7,7 billion of the amount, while domestic debt is hovering around $9,5 billion.

Kaulem said the debt issue was a challenge to Zimbabwe that needed to be addressed as a matter of urgency.

“Zimbabwe has to come up with sustainable ways of generating income and move away from piece-meal interventions that will sink the country into deeper poverty. Reducing the country’s risk premium associated with investment is vital to accelerating economic growth for poverty reduction,” she said.

“Government should invest tangibly in a sustainable manner in, for example, agriculture and mining value chains in order to generate more revenue to manage the economy instead of external indebtedness,” she said.

Kaulem said in order for both external and internal debts to benefit the poor people, the funds must be channelled in those sectors where they would directly or indirectly benefit from.

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“For debt relief to benefit the poor, government needs to channel the funds towards investment in infrastructure, public goods and capital projects to stimulate economic growth. Investing in infrastructure creates income opportunities and generates jobs directly and indirectly, and has the potential to attract foreign investments,” she said.

Kaulem said part of the challenge with this huge debt was government’s inability to diversify revenue sources, coupled with corruption and mismanagement.