November 7, 2003

Debt Hits Z600bn/ Housing backlog to ease

Zimbabwe’s domestic debt has reached more than Z600bn, as government borrows heavily from the private sector to prop up ailing parastatals and finance subsidies on grain and fuel. Major state-owned enterprises, particularly the National Oil Company of Zimbabwe, the Grain Marketing Board, the Zimbabwe Iron and Steel Company and Air Zimbabwe were cited by the finance ministry as the biggest contributors to the domestic debt. In a move to sustain the land reform programme, government is subsidising the price of fuel to resettled farmers as well as grain and wheat purchases from them through the Grain Marketing Board, thus incurring a heavy deficit.

The finance ministry's permanent secretary, Nicholas Ncube, told a meeting of industry and commerce leaders that much of the borrowing was in favour of recurrent expenditure at the expense of capital and infrastructure development. He said most parastatals were recording losses due to mismanagement and their failure to charge economically viable prices.

Despite of the deficit, the government will soon launch the National Housing Development Programme to reduce the housing backlog of around one million over the next five years. Appropriate partnerships between Government departments, local authorities, private housing developers, building societies, banks and housing co-operatives would be established to provide housing. President Mugabe announced that requisite resources would be provided for the acquisition, planning and servicing of land with appropriate on-site and off-site infrastructure in support of housing development from the following financial year. This would also help create employment, increase incomes and expand the tax base of the economy. Due to the fact that the Government was spending about $600 million a year in rentals, the Government was also determined to continue building its own offices throughout the country, Mugabe declared. (Business Day, Johannesburg / The Herald, Harare)

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