Online Reporter
Oliver Kazunga-Senior Reporter
GOVERNMENT will no longer borrow to finance budget support or consumption, with all future loans set to be channelled exclusively towards revenue-generating infrastructure projects capable of repaying themselves, marking a major shift in Zimbabwe’s public debt management strategy.
The new policy, announced by Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube and Treasury Secretary Mr George Guvamatanga, is aimed at ensuring every dollar borrowed is invested in productive assets that generate sufficient cash flows to service the debt, while supporting economic growth.
Projects eligible for debt financing under the new framework include toll roads, railways, dams, irrigation schemes, border posts and power infrastructure, whose revenues are expected to meet repayment obligations without placing additional pressure on the fiscus.
Mr Guvamatanga, said the policy represented a decisive break from past borrowing practices, under which loans were sometimes contracted to finance budget deficits or balance-of-payments support.
“We are very clear that we are not going to be borrowing for budget support or balance-of-payments support.
“We are borrowing to support infrastructure for the borders, for the roads, for the rail, for irrigation, because both of us (with Prof Ncube) are bankers — and we know that you don’t borrow where there is no cash flow to support repayment.
“I think in the past we have done that, and we have learnt our lessons,” he said in an interview with journalists following the presentation of the 2026 Post Mid-Term Budget Review Statement in Harare last Wednesday.
Mr Guvamatanga acknowledged that mistakes had been made in the past.
“We have made our mistakes. But now when we borrow, we ensure there is a supporting cash flow.
“There is a road with toll fees, there is a dam supporting irrigation, there is a border post with activity and fees — those projects can pay for themselves.”
The new financing model comes as Zimbabwe intensifies efforts to unlock long-term, affordable funding from international development finance institutions following progress in macroeconomic reforms, fiscal consolidation and debt servicing.
Zimbabwe has been implementing wide-ranging fiscal and debt management reforms under its debt clearance and arrears resolution programme to restore access to concessional international finance after years of constrained borrowing.
And central to the reforms has been tighter fiscal discipline and prioritising productive public investment, with the new borrowing framework extending that approach by ensuring future loans are linked to projects capable of generating revenues to repay the debt.
Economic analysts generally regard borrowing for productive infrastructure as more sustainable than borrowing for recurrent expenditure because infrastructure assets stimulate economic activity.
Thus, in many cases, such assets generate dedicated income streams that can be used to service the loans that financed them.
Mr Guvamatanga said Zimbabwe’s improved debt servicing record had strengthened confidence among international lenders and development finance institutions.
He revealed that Government was close to settling its loan with the Development Bank of Southern Africa (DBSA) after consistently honouring repayment obligations, a development that was enhancing Zimbabwe’s creditworthiness and opening opportunities for fresh infrastructure financing.
“That ability, the capacity and the willingness to pay is there. That’s why you are now seeing these banks coming and looking at ways of supporting our key infrastructure projects,” said Mr Guvamatanga.
Treasury believes the new borrowing model will accelerate delivery of strategic national infrastructure while safeguarding long-term debt sustainability by ensuring every new loan is backed by a productive asset capable of generating economic returns.
Prof Ncube weighed in, saying the Government was also exploring innovative financing models to unlock additional resources for infrastructure development, including asset recycling under which completed public infrastructure would be refinanced by long-term investors.
Under the model, Government would recover capital already invested in mature infrastructure assets and redirect the funds towards new development projects, while investors recover their investment through future revenues generated by the assets.
“We’re looking at the power sector, the road sector and other strategic infrastructure.
“One of the projects we’ll be looking at is asset recycling, where Government can recoup what it has already spent, while the remaining financing is supported through revenues such as toll fees collected over the concession period,” he said.
Prof Ncube said Zimbabwe was also preparing a pipeline of bankable projects for possible financing through the New Development Bank following the country’s recent admission into the BRICS lender, broadening Government’s options for mobilising long-term development capital.
Among the projects under consideration are the US$4,5 billion Batoka Gorge Hydro-Electric Scheme, major road rehabilitation programmes, irrigation expansion initiatives and improved urban mass transport systems, including the long-proposed Harare-Chitungwiza monorail.
He said Government was also engaging the Africa Finance Corporation to diversify infrastructure financing while growing international investor confidence was creating fresh opportunities for strategic partnerships.
“There is much interest from international financial institutions and private sector investors in Zimbabwe at the moment.
“It is a reflection of a stable and growing economy and the confidence that is now returning,” said Prof Ncube.
The new borrowing policy is expected to become the cornerstone of Government’s infrastructure financing strategy, ensuring that future debt directly supports projects capable of generating economic growth, creating jobs and producing the revenues needed to finance their own repayment while preserving fiscal sustainability.
