KEY POINTS
- Zimbabwe’s external debt equals 81% of GDP.
- Arrears to global lenders hinder funding access.
- IMF program offers a framework for recovery.
Zimbabwe convened an international conference Monday to tackle its $12.7 billion external debt and seek pathways to rejoin global financial markets after more than 20 years of isolation.
President Emmerson Mnangagwa, joined by African Development Bank (AfDB) President Akinwumi Adesina, led discussions in Harare with creditors, financial experts and development partners.
Zimbabwe plans debt restructuring amid GDP strain
The meeting focused on a roadmap to restructure the nation’s debt, which accounts for 81 percent of its gross domestic product (GDP).
According to the United Nations, Zimbabwe’s debt crisis is a reflection of the debt trend in Africa, where 24 to 35 low-income nations are at high risk of debt distress. Zambia, Chad and Ghana have recently restructured their debts.
Zimbabwe’s reliance on arrears and penalties adds complexity to its recovery efforts. This affects its eligibility for financial support until it clears its arrears and stabilizes its debt burden.
Clearing arrears: A national priority
Zimbabwe owes arrears to international institutions, including the AfDB, World Bank, and European Investment Bank.
These unpaid obligations, along with penalties, represent 45 percent of the total debt. Finance Minister Mthuli Ncube said resolving these arrears was essential for unlocking international funding.
“The issue of arrears is a major albatross around our neck,” said Prosper Chitambara, an independent economist. “Once cleared, it will be cheaper to borrow and easier to attract investment.”
The government has sought assistance from advisory firms Global Sovereign Advisory Company and Kepler-Karst, funded by the AfDB’s Africa Legal Support Facility, to guide the debt restructuring process.
Zimbabwe is pursuing an International Monetary Fund Staff-Monitored Program (SMP) as a preliminary step. While the program does not include financial aid, it provides a framework for implementing sound economic policies. However, Zimbabwe has missed two deadlines to initiate the program this year.
Pathway to recovery
Mnangagwa described the conference as a turning point in the nation’s economic strategy. “We aim to outline a roadmap and way forward by the end of this event,” Ncube said.
While the road to recovery is steep, officials and experts agree that resolving the debt issue is critical for restoring confidence among investors and improving Zimbabwe’s economic prospects.
By engaging stakeholders and pursuing reforms, Zimbabwe hopes to chart a path toward fiscal stability and re-entry into international capital markets.
