Harare, Zimbabwe – Zimbabwean President Emmerson Mnangagwa hosted a high-level debt conference on Monday, outlining an ambitious plan to clear significant external debt and ultimately re-engage with international capital markets. The Southern African nation aims to overcome its longstanding financial challenges, including hyperinflation and multiple failed currency reforms, to secure a sustainable economic future.
I was honoured to officiate at the High-Level Structured Dialogue Platform, advancing efforts to resolve Zimbabwe’s US$21 billion debt. Significant progress is being made through economic reforms, improved governance, and land tenure security via 99-year leases.
Our commitment… pic.twitter.com/pBZjeG9rEn
— President of Zimbabwe (@edmnangagwa) November 25, 2024Zimbabwe’s debt burden, amounting to 81% of its GDP, poses a formidable challenge. The government is currently negotiating a Staff Monitored Program (SMP) with the International Monetary Fund (IMF), a crucial step towards implementing necessary policy reforms.
African Development Bank (AfDB) President Akinwumi Adesina emphasized the importance of the SMP, stating that it would pave the way for the bank to provide financial support and help mitigate the potential negative impacts of reforms. Adesina also highlighted the availability of funds from a special AfDB fund to assist with clearing Zimbabwe’s arrears.
Finance Minister Mthuli Ncube indicated that a clearer timeline for debt restructuring would emerge by mid-2025, contingent on securing bridge financing commitments from lenders. Analysts stress the critical importance of clearing arrears to unlock access to international financing and attract foreign investment.
Zimbabwe’s debt crisis has significantly hindered its economic development, preventing it from accessing essential IMF support. The IMF’s current stance is to provide only technical assistance due to the country’s unsustainable debt situation and outstanding arrears.
The government’s pursuit of an IMF SMP is seen as a strategic move to demonstrate its commitment to sound economic policies. However, missed deadlines for securing the SMP have limited the extent of IMF engagement.
Zimbabwe joins a growing number of African nations grappling with debt distress. While countries like Zambia, Chad, Ghana, and Ethiopia have made progress in debt restructuring, Zimbabwe’s unique circumstances, including a significant portion of its debt comprised of arrears and penalties, present additional complexities.
The government has engaged the services of Global Sovereign Advisory Company and Kepler-Karst to provide expert advice on debt restructuring. Despite limited payments to creditors, Zimbabwe remains hopeful for a sustainable resolution to its debt crisis and a path towards economic recovery.
