Treasury Frets Over RBZ External Debt
Finance and Economic Development Minister Mthuli Ncube has said the assumption of the Reserve Bank of Zimbabwe (RBZ)’s external debt by Treasury will make budget financing for the 2024 fiscal year difficult.
On 15 June, President Emmerson Mnangagwa issued Statutory Instrument 108 of 2023 which authorised Treasury to take over RBZ’s external debt.
NewsDay reported that this was done to prevent the central bank from printing money to service its debt but since the promulgation of the statutory instrument, Treasury has acquired $7.69 trillion worth of debt accrued by the RBZ between December 31, 2022 and end of May.
The 2024 budget strategy paper released by Treasury last Friday reads in part:
Government’s financing requirements are expected to remain under pressure during 2024 on account of the takeover of the central bank’s external obligations, growing informalisation and the need to sufficiently provide for NDS1 (National Development Strategy 1) programmes and projects during the medium term.
However, the government’s commitment to maintain the budget deficit within the 3% of GDP (gross domestic product) threshold will be critical in managing inflationary pressures and restoring stability in the economy.
Ncube said economic growth was expected to remain positive as it was projected at 5.3%, 5.2% and 5% for 2023, 2024 and 2025, respectively, well within the NDS1 growth targets. He said:
Government measures in support of macroeconomic stability, coupled with the drive towards structural economic transformation, value addition and beneficiation, are expected to sustain this positive growth trajectory.
He added that increased electricity generation from the Hwange Thermal Power Station and investments by independent power producers will further boost economic activity during 2024.
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