Zimbabwe’s domestic debt ballooned by 40% in just one month, the state-controlled Herald newspaper reported on Wednesday.
Total government domestic debt stood at Z$21-trillion ($210-million) as of June 2, up from Z$15-trillion at the beginning of May, said the daily.
On a year-to-year basis, the debt has risen by more than 250% from Z$5,8-trillion in January, according to the report, which quoted figures from the central bank.
The increase in debt is being blamed on the government’s continual recourse to the domestic market for finance and aggressive mopping activities, said the Herald.
The bulk of the debt comes from treasury bill issues, which have been the chief instrument used by the central bank in its open-market operations, said the newspaper.
Zimbabwe is in the grips of its worst economic crisis, with inflation running at nearly 1 200%. Desperately needed foreign currency inflows have dwindled on the back of plummeting agricultural production and low tourist arrivals.
Economists warn that the government now has very few ways of generating income that will not further impact negatively on the economy.
”Government’s recourse to the domestic sector for funding leads to an expansion in money supply growth, thus it is important for it to contain its expenditure, thereby minimising borrowing from the
domestic sector to reduce inflationary pressures,” an unnamed economist told the Herald. — Sapa-dpa