Online Reporter
Michael Tome
Business Reporter
THE clearance of arrears and debt restructuring is vital for enhancing Zimbabwe’s economic transformation, a multilateral development finance institution, the African Development Bank (AfDB), has said.
According to AfDB, settling arrears with International Financial Institutions (IFIs) would enable Zimbabwe to access crucial concessional financing, driving economic and social development in the process.
Zimbabwe’s debt to international financial institutions, including the African Development Bank (AfDB), World Bank, and European Investment Bank, stands at approximately US$2,6 billion.
This amount is part of the country’s larger US$21 billion debt burden, which has kept Zimbabwe locked out of global capital markets since defaulting on payments in 1999.
However, since 2022, the Government of Zimbabwe has stepped up efforts to clear its debt arrears, and the Government has agreed with its creditors on a comprehensive package of reforms. These reforms are structured around three main pillars, with the first pillar focusing on economic stabilisation and growth, aiming to create a more stable and prosperous economic environment. The second pillar emphasises governance, highlighting the importance of effective governance in managing the country’s resources and development, while the third pillar addresses land tenure reforms and farmer compensation, a critical area that has significant implications for the country’s agricultural sector and economic recovery. Tackling these key areas will allow Zimbabwe to resolve its debt issues, paving the way for sustainable economic development.
However, as it stands, the Government has made significant progress in implementing macroeconomic policies, focusing on monetary and fiscal stability, while engaging in discussions with the IMF on a Staff Monitored Programme (SMP). According to AfDB, a key milestone has been the commencement of compensation payments to former farm owners.
Notably, as of February 2025, 85 former farm owners from five countries (Germany, Switzerland, the Netherlands, Denmark, and the former Yugoslavia) have received US$18,1 million in compensation under bilateral investment partnership promotion 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 early ths week.
Zimbabwe continues to face a substantial financing gap due to limited access to external capital, largely stemming from its high and unsustainable public debt.
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, are going to come up with solutions in the shortest time possible,” said Mr Mugaga.
Since 2022, the Government of Zimbabwe has enhanced its actions aimed at clearing its debt arrears, and AfDB President, Dr Akinwumi Adesina, is championing the process and his bank has provided US$4,1 million to facilitate the Structured Dialogue Platform (SDP) that has been established in Zimbabwe. The SDP has brought together the Government of Zimbabwe, Zimbabwe’s creditors, and other key stakeholders to find a lasting solution to Zimbabwe’s arrears and debt burden
