HARARE – Zimbabwe has identified seven potential sponsors, including foreign governments, multilateral financial institutions, and private financiers, to support its efforts to clear arrears with international creditors. This initiative is part of the government’s broader programme to settle external obligations and restore financial credibility.
The arrears clearance process is expected to commence following the completion of a nine-month-long International Monetary Fund (IMF) Staff-Monitored Programme (SMP), which is scheduled to be finalised by the end of March.
Undergoing the SMP is a critical step in Zimbabwe’s debt resolution strategy, as it will help the country establish a track record of sound economic governance. This is a key requirement for unlocking external financial assistance at more favourable terms.
Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, confirmed that discussions with potential sponsors are in progress.
“The process of negotiating the Staff-Monitored Programme with the IMF is ongoing, and we are nearing finalisation,” he told The Sunday Mail. “Once we have agreed on the SMP, we will implement it over a period of nine months before initiating the arrears clearance process.”
The government has already engaged three of the seven targeted sponsors to assist in clearing Zimbabwe’s arrears, which currently stand at approximately US$7.5 billion.
As part of this strategy, Zimbabwe is also exploring bridge financing arrangements. Bridge financing involves short-term loans that enable a country to clear its arrears and unlock future funding. The government is seeking financial sponsors to provide these bridge loans, which could come from two or three countries willing to back Zimbabwe’s debt repayment process.
“So far, we have targeted seven countries, and I have already held face-to-face meetings with three finance ministers from potential sponsor nations,” said Prof. Ncube. “However, we cannot disclose their identities until agreements are finalised.”
Zimbabwe has opted for the bilateral loan route, where a sponsor provides a loan to help clear arrears with international creditors. In return, Zimbabwe will commit to specific reforms or policy adjustments as part of the agreement.
Other debt resolution options under consideration include debt restructuring with international institutions, issuing debt bonds with a sponsor, and debt-for-development swaps.
Zimbabwe’s Arrears Clearance and Debt Resolution Programme, launched in 2022, aims to restore financial relations with institutions such as the World Bank, the African Development Bank (AfDB), and the Paris Club. The strategy includes economic and governance reforms to enhance fiscal discipline, transparency, and public sector efficiency.
As part of its reform commitments, the government has made progress in compensating white former commercial farmers for improvements made on their land. Over 500 former farm owners have started receiving compensation under the Global Compensation Deed (GCD), an agreement between the government and white former commercial farmers. Payments for 94 farms protected under Bilateral Investment Promotion and Protection Agreements (BIPPAs) are also underway.
The Arrears Clearance and Debt Resolution Programme is being facilitated by former Mozambican President Joaquim Chissano and AfDB President Dr. Akinwumi Adesina. The two recently met President Emmerson Mnangagwa in Harare to review progress and discuss the next steps.
Dr. Adesina reaffirmed the AfDB’s commitment to assisting Zimbabwe, stating, “We have engaged a global financial advisory firm and a legal advisory firm to support Zimbabwe’s debt clearance process. We are also working on securing the bridge financing framework needed for clearing arrears with multilateral financial institutions.”
Zimbabwe’s external debt stood at US$12.4 billion as of September 2024, with US$6.3 billion owed to bilateral creditors and US$3.2 billion owed to multilateral institutions. The Reserve Bank of Zimbabwe’s liabilities, assumed by the Treasury in 2023, amount to US$2.9 billion.
Zimbabwe’s approach mirrors debt resolution strategies implemented by other nations facing financial distress. Greece, for example, relied on sponsor-backed financing from the European Union, the European Central Bank, and the IMF during its debt crisis. Similarly, Zambia secured an IMF Extended Credit Facility in 2022, supported by debt restructuring agreements with bilateral creditors under the G20 Common Framework.
The success of Zimbabwe’s arrears clearance efforts will depend on the effectiveness of the SMP, the commitment of financial sponsors, and the government’s ability to implement agreed reforms. If successful, the programme could pave the way for Zimbabwe’s reintegration into the global financial system and unlock much-needed economic support.
