ON Thursday, Finance and Economic Development minister Mthuli Ncube said Zimbabwe was raving up its debt clearance plan.
He said he had set the ball rolling with token payments to key funders, including the powerful Paris Club whose members had not been paid since 2001.
This is the right path to pursue for the country to unlock more funding opportunities and remove the bad debtor tag.
With the existing external debts estimated at US$10,7 billion attracting more interest charges, continuous defaulting places the country at the mercy of creditor nations.
They will influence other lenders not to give Zimbabwe money or demand higher premiums.
The fact that the debt had risen to over 70% of the country’s gross domestic product indicates how bad the situation is for Zimbabwe.
The country is in serious debt distress, which means it can be classified as a high risk debtor.
However, in pursuing the debt clearance plan, Ncube must balance between pleasing the creditors and reserving fair levels of foreign currency to fund critical social services.
Zimbabwe runs the risk of placing too much attention on clearing its foreign debt at the expense of its impoverished population.
A debt clearance plan that ignores this will be as bad as the debt itself.
Poverty levels will continue to dog the country, mortality rates will spiral and the economic crisis will persist.
When the State enters the domestic debt market and crowds out the private sector, the end result is de-industrialisation, capital flight and job market carnage.
As experienced in the past two decades, it is not the elite that suffers the most under the circumstances, but those at the lower end of the social strata.
So, it’s critical that as we pay our debt, we don’t plunge the nation in extreme poverty.