Zimbabwe charts way out of debt as Mnangagwa hosts conference

Zimbabwean President Emmerson Mnangagwa hosts a conference of creditors and finance executives on Monday to discuss ambitious goals to clear debt arrears and restructure $12.7 billion in external debt.

Zimbabwe's debt pile accounts for 81% of gross domestic product, and clearing it will be a tough challenge for a country that has faced numerous financial crises in recent decades from repeated bouts of hyperinflation to multiple attempts to launch new currency regimes.

The authorities have frequently blamed Western sanctions for the country's continued economic challenges.

"The issue of arrears is a major albatross around our neck," said Prosper Chitambara, a Harare-based independent economist.

Unlocking foreign funding

It will be a long road; for now, even money from the International Monetary Fund, the world's lender of last resort, is unavailable for Zimbabwe. But experts say paying off arrears is essential.

Zimbabwe aims to eventually tap international capital markets for the first time in more than two decades.

"Once the arrears are cleared it will be cheaper to borrow and easier to attract investment," Chitambara said.

Zimbabwe's President Emmerson Mnangagwa and the African Development Bank's (AfDB) president, Akinwumi Adesina, will attend the one-day meeting in Harare, along with creditors, development groups and private sector representatives.

Getting on track with bilateral creditors – and clearing arrears with the AfDB, the World Bank and the European Investment Bank – is necessary to unlock funding for Zimbabwe, once a regional breadbasket that now struggles to feed its own people.

Paying taken

The United Nations estimates 24 out of Africa's 35 low-income countries are at high risk of debt distress, and since 2020, Zambia and Chad have finalised debt reworks. Ghana is wrapping up its own debt rework and Ethiopia is in the midst of a restructuring.

But Zimbabwe is no ordinary default. While 45% of its burden is outstanding debt, the rest is arrears and penalties, according to a 2023 government presentation.

Finance Minister Mthuli Ncube said The Africa Legal Support, an AfDB facility, is paying for two firms - the Global Sovereign Advisory Company and law firm Kepler-Karst - to help advise the government.

Ncube said Zimbabwe has only been paying token amounts to debtors, including 16 bilateral creditors, but gave no further details.

The government aims to outline a "roadmap and way forward" by the end of the event.