Saturday, September 10, 2011

Dealing with Zimbabwe's $7 billion debt

I've recently been in Zimbabwe, a trip that has left me feeling disconcerted, but not for the reasons I expected. Invited by the Zimbabwe Coalition on Debt and Development (ZCDD) to discuss strategies for dealing with the country's debt, there was optimism I'd not seen in news stories about the country.

The economy has now stabilised. The US dollar effectively became the official currency in 2009, breaking the cycle of hyperinflation and recession caused by the government's printing of money. There is a coalition government that has survived for three years without collapsing into civil war, as many feared. Central Harare feels like most other cities: traffic, banks, shops, adverts, newspapers – and inequality. The Zimbabwean upper classes are benefiting from high prices for exports of minerals such as gold and platinum.

These valuable commodities lie at the heart of the economic challenge facing the poor majority: to see their living standards improve. The all too often travelled path is for these resources to leave the country, followed by the wealth they earn – whether taken out by local elites and foreign companies or lost through debt repayments.

I met with 50 activists from civil society organisations to discuss strategy for dealing with Zimbabwe's debt. The government's $7bn foreign debt was created mainly in the 1980s and 1990s through lending from private companies, institutions such as the World Bank, and foreign governments. In 2000 the ZCDD was formed by civil society organisations to campaign for the debt to be cancelled, part of the global Jubilee movement. In the same year, with repayments swallowing up between 25% and 50% of the country's export earnings, the government stopped repaying many of its foreign debts. more