Harare, Zimbabwe — Zimbabwe is set to restart negotiations with creditors later this month to restructure its $21 billion external debt, aiming to end a prolonged default that has left the country excluded from international capital markets since 1999.
Finance Minister Mthuli Ncube confirmed the upcoming discussions while addressing lawmakers at a pre-budget seminar in Bulawayo, Zimbabwe’s second-largest city. “We have been busy, working to eliminate our burden of external arrears,” Ncube said, highlighting the government’s commitment to settling its outstanding debts. The next round of high-level talks is scheduled for November 25, where creditors will discuss steps to advance this goal.
The negotiations will include notable facilitators such as African Development Bank President Akinwumi Adesina and former Mozambican President Joaquim Chissano, who were brought into the discussions by Zimbabwean President Emmerson Mnangagwa in 2022. These efforts are focused on resolving arrears with major international creditors, including the World Bank, Paris Club, European Investment Bank, and the AfDB.
As part of the restructuring process, Zimbabwe recently hired advisors to support its debt strategy. The country’s arrears have effectively cut it off from critical financing options from multilateral lenders like the International Monetary Fund, forcing it to rely on the central bank to meet its funding needs. This financial isolation has fueled inflation and created challenges in stabilising Zimbabwe’s currency, limiting efforts to reduce reliance on the US dollar in local transactions.
One of Zimbabwe’s recent initiatives to achieve currency stability has been the introduction of ZiG, or Zimbabwe Gold, a gold-backed currency launched in April. Central bank Deputy Governor Innocent Matshe, speaking at the same event, encouraged Ncube to promote greater adoption of the ZiG in his forthcoming budget to enhance domestic currency stability.
The Reserve Bank of Zimbabwe has also committed to maintaining a tight monetary policy into the new year, aiming to control excess liquidity and prevent further inflationary pressure. While Zimbabwe’s inflation rate rose sharply to 37.2% in October from 5.8% in September, Matshe indicated that the central bank expects inflation to moderate significantly, projecting a reduction to below 5% by year-end and aiming for stability under 1% throughout 2025.
These debt restructuring efforts and monetary policies are part of a broader strategy by Zimbabwe to reintegrate with the global financial community, secure sustainable funding, and stabilise its economy.
Source: Bloomberg