Zimbabwe’s debt load accounts for 81% of its gross domestic product, and paying off this debt has been a tough battle.
Zimbabwean President Emmerson Mnangagwa will host a conference on Monday, attended by creditors and financial managers, to discuss ambitious goals to clear payment arrears and restructure the country’s $12.7 billion external debt.
Zimbabwe’s debt load represents 81% of its gross domestic product, and with multiple financial crises in recent years, including hyperinflation and attempts to introduce new currency regimes, repaying this debt will be a tough challenge for a country already in economic distress.
Authorities often blame the country’s ongoing economic struggles on sanctions imposed by the West.
Prosper Chitambara, an independent economist based in Harare, said, “Payment delays are a huge burden on us.”
Unlocking foreign funding
It will be a long road; for now, even the International Monetary Fund, the world’s lender of last resort, does not have funds available for Zimbabwe. However, experts say it is crucial to settle the overdue debts.
Zimbabwe aims to re-enter international capital markets for the first time in more than two decades.
Chitambara added, “Once the debts are paid, borrowing will be cheaper, and attracting investment will be easier.”
President Mnangagwa and African Development Bank (AfDB) President Akinwumi Adesina will attend a one-day meeting in Harare with creditors, development groups, and private sector representatives. The aim is to engage with creditors and settle debts with the AfDB, World Bank, and the European Investment Bank, which is crucial for unlocking funds for Zimbabwe, once a regional grain basket but now struggling to feed its own population.
Payment received
The United Nations estimates that 24 of Africa’s 35 low-income countries are at risk of debt distress, and since 2020, Zambia and Chad have completed debt restructurings. Ghana is completing its debt restructuring, while Ethiopia is in the middle of its own.
However, Zimbabwe’s case is not a simple default. According to the government’s 2023 submission, 45% of its burden consists of unpaid debt, with the remainder being delays and penalties.
Finance Minister Mthuli Ncube stated that the African Legal Support Facility, a subsidiary of the AfDB, has paid two firms – Global Sovereign Advisory and the Kepler-Karst law firm – to advise the government.
Ncube also said Zimbabwe has made only symbolic payments to 16 of its bilateral creditors, without providing further details.
The government aims to prepare a “roadmap and way forward” draft at the end of the event.
