Zimbabwe and other regional countries are making progress towards sustainable debt management following the launch of the African Borrowing Charter two years ago.
The African Forum and Network on Debt and Development (AFRODAD) Borrowing Charter was made for African governments to adopt an orderly template for responsible borrowing and debt management.
This came after realising Africa is a resource rich region but still battling debt with other countries’ debt to GDP ratio above the accepted regional threshold of 60 percent.
The Charter has, however, been a tool to enhance transparency and accountability in debt management, as efforts are also made to reduce or eventually pay off both domestic and external debts for African governments.
One of the key strategic goals of the Charter is to contribute to the development and implementation of sustainable debt policies and resources and practices in Africa as well as influence the quality, impact and effectiveness of international public finance, in line with agreed development cooperation effectiveness principles.
Following publishing of the current Charter in 2018, civil society acknowledges Zimbabwe is making strides towards promoting transparency and accountability in public debt management.
AFRODAD senior policy analyst Tirivangani Mutazu, said there has been positive feedback locally and from other African countries.
“There are certain guidelines and fundamentals that apply across the region for instance transparency and accountability as well as the role of Parliaments in approving loans.
“So far there has been positive feedback and we are seeing improvements at Zimbabwean level and across the region. Some issues have been factored in such as making public information on debt, we are seeing Ministry of Finance through the Public Debt Office publishing debt bulletins, which is a step in the right direction.
“A lot of African countries now have public debt offices within their finance ministries,” he said in an interview on the sidelines of the ongoing AFRODAD 2020 Summer School here.
Mr Mutazu also added that publishing of auditor general’s reports was also another step in the right direction.
The first current Borrowing Charter is the third edition after the first and second editions were published in 2010 and 2013 respectively reflective of the developments on the debt market in the past decade.
For instance, over a decade ago, Euro bonds were not popular but now growing — creating scope for new information on their management.
“Debt is constantly changing. The debt market years back is different from today, for instance, we are seeing a new trend where African governments are mortgaging natural resources and as a region it is important to understand what this means and how best to handle this in a sustainable manner.
“The past decade has also seen China become the biggest lender in the region, and such issues prompt us to update the borrowing Charter in line with what is happening” said Mr Mutazu.
Other experts in debt management have also argued that Zimbabwe and the region have an opportunity to manage its natural resources in a sustainable manner which can help paying off its debts.
There is also room for improvement in debt management information to further enhance transparency and accountability.
While Treasury now publishes public debt information, experts say more can be done to provide a breakdown of the debts, terms and conditions as well as the impact of such loans to development of local communities.