Illicit Financial Flows Have Far Reaching Consequences: Justice Coalition

Illicit Financial Flows Have Far Reaching Consequences: Justice Coalition
Image Credit: Quarts Africa

A justice coalition has said that revenue lost through illicit financial flows have far reaching consequences on the fulfiliment of social and economic rights of the generality of Zimbabwe.

Zimbabwe Coalition on Debt and Development (ZIMCODD) in the First Quarter 2018 Fact Sheet says that the cumulative estimates of close to US$ 2.8 billion lost to illicit financial flows represent potential revenue loss of 51% of the 2018 revenue projections of US$5.533 billion.

“The primary implication of resource leakage is budget deficit and subsequently the inability to adequately fund education, health, agriculture, water and sanitation,” ZIMCODD says.

“The US$1.4 billion externalised funds acknowledged by the government was sufficient to finance the entire budget for education (US$905.5 million), health (US$409 million) and transport infrastructure (US$87.5 million).”

The coalition goes on to give other impacts of illicit financial flows in Zimbabwe in the 2018 First Quarter Fact Sheet.

“Zimbabwe failed to raise enough resources in 2017 amid illicit financial flows, leaving a budget deficit of US$1.7 billion which was financed through Treasury Bills, further drawing public debt to unsustainable levels,” ZIMCODD says.

“Zimbabwe also finds itself in external debt trap which has a lot of conditionalities, despite the abundance of natural resources, hence the natural resource curse.”

“The government’s failure to generate revenue from private sector and individuals amounting to an estimated $3.36 billion, perpetuate inequality as the government resort to progressive taxation especially VAT which impact heavily on the poor especially the poor who constitute 70%of people living in poverty,” The Fact Sheet continues. “The implication on the poor is double since they also rely entirely on public goods and services.”

ZIMCODD raises the impacts of illicit financial flows as pictures of people said to have been in police custody for trying to externalise large sums of cash in a cashless Zimbabwe are currently circulating on social media.

“IFFs (Illicit Financial Flows) have affected public sector investment with more than 90% of
the meagre collections going to recurrent expenditures. The low public sector investment has impacted on government efforts to address high unemployment (90%),” ZIMCODD says.

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