The Standard

The Standard August 3 to 9 2014 7
Investing in People for Social & Economic Justice
ZIMCODD STATEMENT ON THE SETTING UP OF THE
ZIMBABWE DEBT MANAGEMENT OFFICE
On 3 July 2014, the Minister of
Finance and Economic Development,
Honourable Patrick Chinamasa,
issued a press statement on the
Government of Zimbabwe (GoZ)’s
intention to set up a Zimbabwe Debt
Management Office (ZDMO). The
statement focused on the creation
of the ZDMO and the principles of
the Debt Management Bill that was
approved by Cabinet. Whereas there
are a number of aspects that have
a bearing on public accountability
in relationship to public debt
management and loan contraction,
ZIMCODD wishes to flag out a few
issues and state the organization’s
position as outlined below.
We note that this move comes at
a time when the country has been
saddled by an external debt stock
which stands at around US$9,9
billion, constituting about 76 %
of the country’s Gross Domestic
Product (GDP) as of 31 December
2013. Over and above this, the
Reserve Bank of Zimbabwe (RBZ)
is reported to have accumulated
domestic and international debt
exceeding US$1,35 billion (Newsday,
RBZ saddled with $1.3 billion debt, 6
March 2014).
For the record, ZIMCODD has been
advocating for a lasting solution to
the country’s crippling debt for the
past 14 years, calling for, among
other things; the conducting of a
national debt audit, cancellation
or repudiation of illegitimate and
odious debts and the focus on
domestic resource mobilisation,
transparent and accountable
utilization of the same for human
and social development which
should translate into an improved
GPD per capita.
ZIMCODD is convinced that the debt
question can be dealt with if the
necessary frameworks and political
will is in place. We note that the step
to create ZDMO through an Act of
Parliament is part of the Zimbabwe
Accelerated Arrears Clearance,
Debt and Development Strategy
(ZAADDS) which was announced in
March 2012.
The establishment of ZDMO is a
noble idea which is in line with the
general international best practice.
However, before the setting up of
this office, ZIMCODD calls for an
inclusive All Stakeholders Public
Debt Dialogue Platform that brings
together representatives from the
various sectors of the Zimbabwean
society to input into the process of
finding a lasting solution to the now
threatening national debt crisis.
ZIMCODD categorically denounces
any plans to deal with the debt crisis
through following International
Financial Institutions (IFIs’) macroeconomic
prescriptions that are
not pro-poor. Instead of focusing
on the IMF prescribed Staff
Monitored Programme (SMP) and
other IFIs driven prescriptions, the
Stakeholders Public Debt Dialogue
Platform will enable the general
citizenry, who are responsible for
repaying the debts already accrued
and any future loans, to participate
and input in the processes, thus
enhancing transparency and
accountability.
Zimcodd is gravely concerned by the
Minister’s proposal in his statement
to promote the principle of vesting
the power to borrow in a single
authority that is the Minister of
Finance. ZIMCODD is strongly against
the proposal to have the power to
contract loans resting in a single
authority as this exposes the whole
nation to the wisdom or lack thereof,
of the Minister at the time. We also
note that this is unconstitutional as
it violates section 298 (Principles of
Public Accountability) and Section
299 (Parliamentary Oversight of
State revenues and Expenditures)
let alone the letter and spirit of good
governance. Where there shall be
need for the country to contract any
loans in the future, Zimcodd stands
solidly on its known position that
this should be done in a transparent
manner so as to promote ethos
of public accountability and state
responsiveness. The executive must
ensure that Parliament must at every
opportunity be afforded space to
exercise its oversight role on all state
revenues and expenditure as stated
in Section 299 of the Constitution.
The composition of the proposed
External Loans and Domestic Debt
Management Committee (ELDDC)
is not adequate as it marginalises
the public by only including the
Reserve Bank Governor, Permanent
Secretary of the Ministry of
Finance and the Attorney General.
In that respect, ZIMCODD solidly
demands the inclusion of the
public or its representatives
in this committee through the
Parliament (Parliamentary Portfolio
Committees) and Civil Society
Organisations that are working on
debt and economic justice to ensure
transparency and accountability.
The emphasis on reporting on
debt management in the proposal
is commendable as it promotes
transparency and accountability.
However, the notion that the
Minister will report in not later
than 3 months after the end of a
financial year is unconstitutional. In
terms of Section 300 (4) (a) of the
country’s Constitution, the Minister
is supposed to report twice a year
to Parliament on the performance
of loans raised by the State and the
loans guaranteed by the State. Most
importantly, the reports must be
disseminated to the public since they
are the ones who repay the loans
through taxes and levies. Citizens
should be informed of all loans with
terms and conditions of the loans
published in accessible public media
before and after they are signed.
In light of the above, ZIMCODD
restates its position on the roadmap
towards resolving the national debt
crisis as:
1. An urgent Official Public Debt
Audit- As the starting point towards
a lasting solution, a national public
debt audit will surface the origins,
structure, and legitimacy, how
much is owed to who, growth and
impact of the loans on social and
economic development. ZIMCODD
therefore calls for the Zimbabwe
Parliament to immediately set up a
Public Debt Commission to conduct
an official debt audit before any
debt relief mechanism can be
considered. The commission should
utilise the doctrine of odious debt,
and recommend the repudiation of
any previous loans which fall in this
category.
2. Convening of an All Stakeholders
Public Debt Dialogue Platform that
brings together representatives from
the various sectors of our society
(faith based organizations, labour,
special interest groups, among
others), parliament, representatives
of creditors, GoZ, to inform the
process of finding a sustainable
solution on the national debt crisis.
3. Total and Unconditional
Cancellation of the debt- IFIs’
macro-economic prescriptions
that have a history of infringing on
people’s social and economic rights
must not be accepted as conditions
for debt relief. Moreso, those
responsible for the management
of any public finances, which may
include but not limited to proceeds
from debt relief/cancellation, must
adhere to pricnciples of public
accountability and transparency as
set out in sections 298 and 299 of
the country’s constituion, which
sections must be accompanied by
strong and effective public finances
management mechanisms that
safeguard public resources from
abuse and the vice of corruption.
4. Domestic Resource Mobilisation:
Instead of focusing on repaying debts
in order to be able to borrow again,
the GoZ should focus on domestic
resources mobilisation and plugging
of illicit outflows through high levels
of corruption, tax evasion and tax
dodging in the extractive industry,
particularly the mining sector.
FOR A DETAILED POSITION PAPER
CONTACT:
Zimbabwe Coalition on Debt and
Development (ZIMCODD)
226, Samora Machel Ave, Eastlea
HARARE
Tel: +263-4-776830
803, 8thFloor, Charter House,
Leopold Takawira
BULAWAYO
Tel: +263-9-886594/5
Email:zimcodd@zimcodd.co.zw.
Website: www.zimcodd.org.zw