Mnangagwa to implementing key reforms to resolve Zimbabwe’s debt burden, end 21 years of sanctions
- Zimbabwe’s total consolidated debt stands at $17.5 billion.
- Debt owed to international creditors stands at $14.04 billion, while domestic debt stands at $3.4 billion.
- Debt owed to bilateral creditors is estimated at $5.75 billion, while debt to multilateral creditors is estimated at $2.5 billion.
President Emmerson Mnangagwa has reassured development partners and creditors that his government is committed to the implementation of key reforms critical to resolving the country’s nearly $8.3 billion of debts and arrears.
He was speaking during the high-level debt resolution forum held Monday in the capital Harare, that was also addressed by the President of the African Development Bank Dr. Akinwumi Adesina, the facilitator of the high-level dialogues, former president of Mozambique Joachim Chissano and attended by government officials, development partners, private sector, former farm owners and civil society organizations.
According to President Mnangagwa, “in spite of the challenges associated with the debt overhang and further exacerbated by the albatross of the illegal economic sanctions, Zimbabwe is realizing key milestones towards moving our country forward for the good of our people.” The three key reform pillars for Zimbabwe’s implementation program include governance reforms, land tenure reforms, compensation of former farm owners and the resolution of bilateral investment protection agreements.
Dr. Adesina, who is the official champion for Zimbabwe’s arrears clearance and debt resolution expressed deep concern about the country’s debt, and a “debt accumulation from arrears that don’t have an end in sight.”
According to Adesina, “Zimbabwe cannot run up the hill of economic recovery carrying a backpack of debt on its back. It is time for a comprehensive debt arrears clearance and debt resolution for Zimbabwe. But getting there is not a walk in the park. We must address history, to make history.”
He added, “economic sanctions are driving Zimbabwe further into unsustainable debt. The debt itself is not as debilitating as the arrears on the debt since the country cannot access international concessional financing or other revenue or less expensive financing to pay down its debt obligations.”
Majority of Zimbabwe’s combined $8.3 billion bilateral and multilateral debt is accounted for by arrears. The country currently publishes public debt statistics and debt payment information to ensure transparency and accountability. “There is need to nurture the trust and good will which continues to grow among all parties,” President Mnangagwa said.
He added that the country’s sustainable economic recovery requires augmentation by a comprehensive arrears clearance and debt resolution process which is backed by international financial institutions and the international community at large.
In his remarks, Mr. Chissano said Zimbabwe’s situation is hurting the region: “The crisis in the country is having terrible consequences for the region, as Zimbabwe lies at the heart of Southern Africa. Many regional infrastructure development plans, including roads, railways and power transmission lines have been brought to a standstill, as they have to run through the country. The continental free trade is also undermined by the situation prevailing in Zimbabwe.”
Mobilizing $3.5 billion for compensation
On land reforms and compensation, Dr. Adesina said the Bank is working with the Government of Zimbabwe to develop innovative financial instruments and structures that can be used to front-load the mobilization of $3.5 billion for compensations.
He cautioned against further delays, which could erode trust and confidence. “So, timing counts; responsiveness counts; and financial sustainability counts,” he said.
Adesina appealed to development partners “to work together on this proposed structure which can help leverage capital markets to fund compensations without additional debt for Zimbabwe.”
The African Development Bank head commended the government for its decision to make land titles available to enhance the security of commercial farmland. “These would be for 99-year leases which are also commercially viable, bankable, and transferable,” he recommended.
Commitment to free and fair elections
On electoral reforms, President Mnangagwa assured stakeholders that the county has put in place the requisite mechanisms to guarantee peaceful, free, fair and credible elections scheduled for August this year.
“My government stands committed to consolidating constitutionalism, rule of law, good governance and protecting constitutionally enshrined rights and freedoms,” Mnangagwa said.
Adesina commended the Government of Zimbabwe and noted that “The people of Zimbabwe and the international community will be watching very closely. The full weight of re-engagement with the international community will depend on this. It will also depend not just on the election, but the entire electoral process that guarantees a credible election,” Adesina urged.
He further emphasized the need for stakeholders to ensure that there is concrete and measurable progress on the Zimbabwe Democracy and Economic Recovery Act (ZIDERA), which is critical for re-engagement with the United States and could be used to support advocacy for the lifting of select sanctions imposed by the US Congress.
The African Development Bank chief and Mr. Chissano visited the US early May to meet with leaders in the US Congress, Treasury Department, State Department, and other US agencies.
Adesina said, “it was very clear that there is support for this high-level dialogue, and a hope that it will translate into concrete and measurable progress on the ground to inform a consideration of the lifting of the sanctions under ZIDERA.”
In December 2022, the Zimbabwean government established a Structured Dialogue Platform with all creditors and development partners, to institutionalize structured dialogue on economic and governance reforms to underpin the arrears clearance and debt resolution process.