HARARE – Zimbabwe’s Finance Minister, Mthuli Ncube, has acknowledged that the country’s escalating debt crisis is severely hampering efforts to stabilise the economy, calling it a critical challenge that dominates his agenda.
Speaking during an event in Harare this week, Ncube painted a grim picture of Zimbabwe’s financial situation. The country’s public debt has ballooned to over US$21 billion—equivalent to nearly 90% of its GDP. Key creditors include the World Bank, the African Development Bank (AfDB), and various bilateral lenders such as the Paris Club and non-Paris Club members.
Ncube’s Stark Admission
“If there is anything that keeps me awake at night as the Finance Minister, it’s this debt crisis. The issue of debt is critical—an albatross around our necks—and we need to remove it so that the economy can move forward,” Ncube said, as quoted by Business Times.
The minister expressed particular concern over the mismatch between Zimbabwe’s economic growth rate and the rising cost of debt.
“Zimbabwe’s average growth of around 6% is way lower than the interest rates on our debt. This means our debt will continue to grow unless we take decisive action to restructure it,” he added.
Impact on the Economy
Zimbabwe’s mounting debt burden has constrained government spending, limiting its ability to fund essential public services such as healthcare, education, and infrastructure development. The fiscal space has also shrunk significantly, making it harder to attract new investment and achieve sustainable economic growth.
Economists warn that the debt crisis exacerbates poverty and unemployment while discouraging international financiers from engaging with Zimbabwe.
Proposed Solutions
To address the crisis, Ncube outlined a multi-pronged strategy that includes:
- Restructuring Debt
The government is seeking to renegotiate its debt obligations to ensure that the principal and interest rates are manageable. - Privatising State-Owned Enterprises (SOEs)
Underperforming SOEs are being identified for divestiture to raise funds for debt repayment. Industries targeted include agriculture, energy, and transport. - Engaging International Partners
Zimbabwe has entered into high-level dialogue with international financiers through a platform led by AfDB President Dr. Akinwumi Adesina and former Mozambican President Joaquim Chissano. The platform aims to clear arrears and develop a roadmap for sustainable debt resolution.
However, these efforts have been slow to materialise due to delays in implementing essential governance reforms, a precondition set by creditors for any meaningful debt relief.
Broader Challenges
The debt crisis is just one of Zimbabwe’s many economic challenges. The country is grappling with high inflation, currency instability, and limited access to international credit markets. Public infrastructure is crumbling, and citizens face frequent power outages and fuel shortages.
Political uncertainty and a lack of confidence in government institutions have also deterred investment, making the path to recovery even steeper.
Looking Ahead
Economic experts emphasise that while restructuring debt and divesting from SOEs are important steps, addressing the root causes of Zimbabwe’s economic challenges—such as corruption, poor fiscal management, and policy inconsistencies—is equally critical.
“The government needs to adopt a holistic approach that includes governance reforms, investment in productive sectors, and fostering a stable macroeconomic environment,” said Dr. Prosper Chitambara, an economist with the Labour and Economic Development Research Institute of Zimbabwe.
Without swift and coordinated action, Zimbabwe risks falling deeper into an economic quagmire, leaving future generations saddled with an unsustainable debt burden.
