Online Reporter
Michael Tome, Zimpapers Business Hub
THE clearance of arrears and restructuring of sovereign debt are vital anchors for Zimbabwe’s economic transformation, the African Development Bank (AfDB) has said, as they would open access to affordable long-term financing.
AfDB said that settling the long-standing arrears with International Financial Institutions would enable Zimbabwe to resume access to concessional financing the country needs to drive rapid economic and social development.
Zimbabwe’s debt to international financial institutions, including AfDB, the World Bank, and the European Investment Bank, stands at approximately US$3,2 billion, which has blocked the country from accessing funding from multilateral lenders.
This is part of the country’s US$21 billion total sovereign debt.
However, since 2022, the Government of Zimbabwe has been making efforts to clear its debt and arrears, and the Government has agreed with its foreign creditors on a comprehensive package of reforms, as part of the debt resolution framework.
The reforms are structured around three main pillars.
The first pillar focuses on economic stabilisation and growth, aiming to create a more stable and prosperous economic environment.
The third pillar is on Governance, highlighting the importance of effective governance in managing the country’s resources and development programmes.
Zimbabwe is also implementing reforms around land tenure and farmer compensation, which are considered critical elements for the country’s agricultural sector and economic recovery.
Tackling these key areas would allow Zimbabwe to resolve its debt issues, paving the way for sustainable economic development.
The Government has made significant progress in implementing macroeconomic policies to stabilise and drive economic growth, focusing on monetary and fiscal stability, while engaging in discussions with the International Monetary Fund on a Staff Monitored Programme (SMP).
According to AfDB, a key milestone towards the economic reform programme has been the commencement of compensation payments to former farm owners.
As of February 2025, 85 former farm owners from Germany, Switzerland, the Netherlands, Denmark, and the former Yugoslavia had received US$18,1 million in compensation in line with provisions of Bilateral Investment Promotion and Protection Agreements.
Additionally, the Government has made payments under the Global Compensation Deed, disbursing US$3,1 million to the first batch of 379 farms. This amount represents one percent of the approved clearance value of US$311 million.
“The high debt situation of Zimbabwe is a challenge we need to address, and clearing arrears and restructuring debt are crucial for Zimbabwe’s economic transformation to gain momentum.
“As AfDB, we are happy to be involved in that process to make sure that Zimbabwe addresses its arrears by repaying its debt, to unlock concessional financing.
“That is necessary for business as well as the country, to be able to access credit on the international market,” said AfDB Principal Country Economist Mr Kelvin Banda while speaking at the launch of Zimbabwe’s 2025 Country Focus Report.
Zimbabwe continues to face substantial financing gaps due to limited access to affordable external capital, largely stemming from its outstanding unsustainable public debt position.
Zimbabwe National Chamber of Commerce (ZNCC) chief executive, Mr Christopher Mugaga, said the Government and stakeholders should act swiftly to find solutions to the debt challenge.
“Our national debt remains a significant burden, putting us in a difficult position. If we continue to carry this debt, it will likely lead to higher taxes, as a substantial portion of our revenue will go towards debt servicing.
“We hope the Government, in collaboration with relevant stakeholders, is going to come up with solutions in the shortest time possible,” said Mr Mugaga.
In 2022, the Government of Zimbabwe appointed AfDB president Dr Akinwumi Adesina to champion the arrears and debt resolution process. The bank provided US$4,1 million to facilitate the Structured Dialogue Platform (SDP) that has been established in Zimbabwe.
The SDP brought together Zimbabwe’s creditors and other key stakeholders to find a lasting solution to Zimbabwe’s arrears and debt burden.
