In view of recent increases in public borrowing, which raise questions about the sustainability of public debt, there is need for Government to come up with comprehensive, reliable and up-to-date public debt databases to produce statistics for debt policy formulation. And the Government has made strides in this respect.
Last year, the Ministry of Finance and Economic Development engaged the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) and the United Nations Conference on Trade and Development (UNCTAD) for technical assistance in conducting a debt database validation exercise and training staff on data validation using the Debt Management and Financial Analysis System (DMFAS).
Addressing a regional workshop on data validation using the Debt Management and Financial Analysis System organised by MEFMI and UNCTAD, permanent secretary in the Ministry of Finance and Economic Development Willard Manungo said that debt data validation ensures accurate and consistent data, which is critical for debt management policy and strategy formulation.
He added that this facilitates implementation of debt management activities such as debt sustainability analysis, without which formulation of effective debt strategies and borrowing polices would be “virtually impossible.”
Experts say effective debt strategies are critical insofar as they help to monitor public indebtedness and accompanying metrics such as government debt-to-GDP (gross domestic product) ratio, which is essentially an indicator of an economy’s health and a key factor for the sustainability of government finance. And it has become increasingly important to monitor public indebtedness in view of the growing recognition that the relationship of public and private debt is of importance for macroeconomic outcomes and financial stability. Economic analyst Perry Munzwembiri explained to the Business Weekly:
“For Zimbabwe at the moment I think it would be remiss to talk about what fiscal authorities can do to spur growth without first focusing on fiscal consolidation and discipline. Fiscal debts have been accumulating over the years and crowding out private sector investments which ultimately drive economic growth. Fiscal authorities would do well to reign in debt, in a practical and intentional manner.”
The Zimbabwean Government has been making steady progress in strengthening its public debt management systems over the last few years. In 2014, a joint International Monetary Fund (IMF) and World Bank mission conducted a reconciliation exercise of Zimbabwe’s public and publicly guaranteed external debt owed to multilateral, bilateral, and commercial creditors.
The exercise verified the debt data records in DMFAS against information received from creditors, and considerable discrepancies were identified and corrected. A subsequent joint MEFMI/World Bank/IMF debt management performance assessment (DeMPA) conducted in December 2015 identified additional discrepancies in the database that needed to be corrected.