The concept of public debt and public debt distress is one that affects each and every household, and yet the general public often gets lost in the terms that are employed when addressing the issue. There is need to cultivate a citizen understanding of public debt, public debt distress and how it affects day to day living in the context of Zimbabwe.
Debt itself is money that is owed or that is due to be paid back. When one falls on hard times, they may need to borrow some money from family, friends or from the bank just to keep afloat. Once you set out the terms of repayment and you receive the money, that means you are now in debt. When you think of it, there is nothing wrong with this arrangement. You acquire the money you need to solve a pressing financial need, and you make sure that before or on the day you agreed upon, you pay it back. In other words, debt only becomes bad when its unsustainable.
In a situation where you feel you won’t be able to pay back the debt, and you start borrowing from other people, starting with family members , going to friends and to other people who may not be close to you to offset other debts and you eventually get caught up in a web. You take from your aunt to pay what you took from your grandparents, then you take from your parent to cover what you took from your cousin, then from your neighbor to payback what you owe your aunt and from the church to payback the shop-owner or the loan shark. It just gets to a point where you just owe so many people so much money, and no one is willing to give you any more money. This is where we say you are now in debt distress. Debt distress therefore is a situation in which one has so much debt that continuing to operate becomes difficult.
In most cases, women will carry the debt burden as they borrow in order to feed their families in hard times. Due to the unfavorable economic conditions, where the is no cushion for women, and also given the wage inequality that keeps on increasing at their disadvantage, women often fail to pay their debts in-time and get into debt distress. In some instances, husbands who lack the ability to have financial priorities borrow for prestige and women and children suffer for that.
Similarly, this could happen at national level. A country may feel the need to borrow in order to ensure the smooth operation of national projects. As already indicated, debt contraction is not a bad thing as it relieves financing pressure from the citizens. For example, to provide capital needed to finance development projects like opening up industries, it would be a burden to the citizens if taxes are used, and it would be much better to borrow the money needed and open up the industries while ensuring that they will generate output enough to pay back the debt when it is due.……………To be continued
Written by: Yollander Millin