HARARE – Zimbabwe’s rich diamond reserves present the best opportunity for the troubled southern African country to repay its ballooning debt, which has seen the country failing to access fresh lines of credit from international financial institution, according to Morgan&Co, one of the most authoritative research firms.

Official statistics show that Zimbabwe’s debt has spiralled to RTGS$19,7 billion, and is estimated by Morgan&Co to be 114 percent of the country’s gross domestic product (GDP).

“We contend that diamond mining presents a significant opportunity for the country to generate the much-needed foreign currency and also clear external debt,” Morgan&Co said in a note to its clients last week.

“Our view is that Zimbabwe should deal with the debt overhang by leveraging off strategic minerals such as diamonds. The Zimbabwe Consolidated Diamond Company is aiming to ramp up output to 10 million carats per annum in the next two years. The success of diamond exploration in the neighbouring Botswana and South Africa has made a positive impact on diamond prospectivity.”

“The contribution of diamonds to Zimbabwe’s total mineral revenue has also increased from five percent in 2016 to nine percent in 2017. That said, despite discovering huge diamond deposits in the eastern parts of the country, Zimbabwe is yet to realise meaningful benefits from their exploitation. Government will have to deal with corruption issues and push for an efficient allocation of resources,” said Morgan&Co.

Zimbabwe’s external debt was estimated at US$8 billion in the first half of the year, with US$5,9 billion as accumulated arrears, while debts to multilateral institutions were estimated at US$25 billion.

“The continuous accumulation of arrears remains a major setback for the economic growth and development,” Morgan&Co said.

In 2015, Zimbabwe came up with an arrears repayment to creditors but failed after Harare failed to honour crucial conditions of the pact inked in Lima, Peru.

This week, Zimbabwe laid out a plan to generated $12 billion from its minerals by 2023.

It shows that even in government, the view is that the mining industry can help President Emmerson Mnangagwa end a two decade-long economic crisis.