THE Zimbabwe Economic Policy Analysis and Research Unit (Zeparu) says the country’s debt to gross domestic product (GDP) ratio will balloon to 101,6% by year end due to legacy debt, farmers’ compensation and COVID-19.
On May 4, 2020, government announced an $18 billion COVID-19 economic recovery stimulus package to deal with the effects of the global pandemic. But, since this was not budgeted for, it is likely to increase public debt as the government mobilises resources to fund the stimulus as it has no access to international credit lines.
This comes at a time government is already in high debt distress with external debt estimated at nearly US$11 billion and $8,868 billion domestically as at December 2019.
“The public and publicly guaranteed external debt to GDP ratio for 2019 was 47,6% and is projected to increase to 51,5% in 2020 (International Monetary Fund, 2020). This debt position does not take into account the legacy debts incurred by the Reserve Bank of Zimbabwe through compensation of some stakeholders for losses incurred following the currency conversion estimated at about US$1,2 billion and farmers’ compensation,” said Zeparu in its new May 2020 economic barometer.
