Finance Permanent Secretary George Guvamatanga has robustly defended the government’s contentious decision to increase public debt as a means to capitalize the Mutapa Investment Fund, a move that has sparked debate among economists and the public alike.
Speaking recently, Guvamatanga clarified that the debt accrued by the government is structured as a loan to the sovereign wealth fund, rather than a direct fiscal burden on the state.
Guvamatanga emphasized the necessity of the decision, noting, “We have obviously argued on how it is going to be accounted for. The debt for Mutapa is actually a loaner to Mutapa, and the government is going to oversee or take the right over any disposal that would be done by Mutapa. They will have to pay off that debt back.”
The strategy aligns with global practices concerning the capitalization of sovereign wealth funds, which are typically funded through various means, including asset transfers, grants, or loans from the sovereign. Guvamatanga was unequivocal in stating that, “There’s nothing unusual or amiss that there was some funding through debt that was provided to the sovereign wealth fund.”
He further assured that stringent loan agreements are in place, reinforcing the government’s confidence in the fund’s ability to repay the debt. This stance comes as the government seeks to leverage the Mutapa Investment Fund to spur economic growth and manage national assets more efficiently, despite concerns over the implications of increased public debt.
