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Zim Debt Overhang Crippling
Zimbabwe’s US$21 billion debt overhang has had a crippling impact on the economy.
Debt A Drag On The Economy
Zimbabwe’s US$21 billion debt overhang has had a crippling impact on the economy.
The country’s debt-to-GDP ratio is alarmingly high, indicating that public debt is growing faster than national income.
This means Zimbabwe has a low capacity to repay its growing debt, making it challenging to achieve sustainable economic growth.
Debt is a drag on the economy.
The debt overhang has led to reduced economic growth, as a significant portion of the country’s revenue is diverted towards debt servicing and not being invested in infrastructure and other critical areas.
It has also resulted in reduced government spending on essential public services, exacerbating social service delivery failures, poverty and inequality.
Besides, it contributes to high inflation and currency rapid devaluation, making it difficult for businesses and individuals to access foreign currency.
Zimbabwe’s high debt levels have further made it challenging for the country to access credit from international lenders, particularly key international financial institutions, further constraining economic growth.
To address the debt overhang, Zimbabwe come up with High-Level Structured Dialogue Platform Forum For Arrears Clearance and Debt Resolution Process which is being facilited by former Mozambican president Joachim Chissano and African Development Bank president Akinwumi Adesina.
The objective is to implement effective debt management policies and strategies aimed at reducing the cost and risks associated with external debt for Zimbabwe .
This is largely premised on a combination of debt restructuring, fiscal discipline, and economic reforms.
As part of this, Zimbabwe is expected to ensure political reforms, while upholding democratic fundamentals: constitutionalism, rule of law, property rights, judicial independence and human rights.
PRESIDENT EMMERSON MNANGAGWA’S SPEECH AT THE STRUCTURED DIALOGUE PLATFORM FORUM FOR ARREARS CLEARANCE AND DEBT RESOLUTION PROCESS
(At the Harare International Conference Centre, yesterday):
Let me first of all welcome you all to the sixth High-Level Structured Dialogue Platform Forum of this Arrears Clearance and Debt Resolution Process.
Since the establishment of the Structured Dialogue Platform Process in December 2022, we have registered tremendous progress, with growing consensus, trust and confidence in this initiative.
We have also seen an inclusive and transparent consultative process, as we institutionalised dialogue on Economic and Governance reforms, underpinning Zimbabwe’s Arrears Clearance and Debt Resolution Process.
You Will recall that the reforms are underpinned by t he following strategic Pillars: Economc Growth and Stability Reforms; Governance Reforms; and Land Tenure Reforms.
The Zimbabwean economy has shown resilience, registenng a 5.3 percent growth In 2023.
This is projected to grow by 2 percent in 2024, mainly on accou nt of the El-Nino-induced drought, which affected agricultural production.
In 2025, the economy is projected to rebound and grow by 6 percent due to the recovery of the agricult ure and mining sectors.
Despite the challenges associated with the external debt overhang, global climate shocks, and the albatross of the illegal economic sanctions, Zimbabwe is realising key milestones. Government remains committed to maintaining fisc al discipline through sustainable budget deficits of Iess than 2 percent of GDP.
Similarly, tight monetary policy to support the effective management of money supply growth will remain in place.
Co-ordination between fiscal and monetary policies will ensure stability of the exchange rate a nd low single digit inflation.
To bolster macro-economic stability, my Government, in April 2024, introduced a new local currency the Zimbabwe Gold (ZiG).
In addition, all Reserve Bank of Zimbabwe foreign currency liabilities were transferred to Treasury and t hese are now being financed through the national budget.
In terms of the exchange rate, there ia now greater fl exibllity on the foreign exchange market.
To anchor implementation of further economic reforms under the Arrears Clearance and Debt Resolution Process, Government is currently negotiating a Staff Monitored Programme (SMP), with the International Monetary Fund.
The implementation of any reforms under the SMP, however, impacts negatively on the vulnerable groups of our population.
In this regard, the protection of the vulnerable groups, through effective social protect lon programmes is of critical importance to my Government.
With regards to the Land Tenure Reforms, my Government, in October 2024 made a bold decision to give security of tenure to all the beneficiaries of the Land Reform Programme
This is in line with Section 2 92 of our Constitution.
All land held by the beneficiaries of the Land Reform Programme under the 99 year leases, offer letters, a nd permits, will now be held under bankable, registrable and transferable tenure documents.
In line With the Global Compensation Deed, signed i n 2020, my Government made an allocation of US$35 million in the 2024 National Budget.
I am pleased to highlight that a total of 444 applications for compensation under the Global Compensation Dee d, were approved, to date, for payment by the Compensatlon Committee.
An amount of US$20 million was allocated in the 20 24 National Budget for compensation of farms prot ected by Bilateral Investment Protection and Promotion Agreements.
So far, 94 applications have been approved for payment.
The Government and people of Zimbabwe deem it, in their fundamental interest and part of their nation al character, to consolidate constitutionalism, the rule of law, good governance and the protection of constitutionally enshrined rights and freedoms.
Governance reforms are, therefore, guaranteed under the Second Republic.
A countrywide decentralisatlon of our justice delivery system is ongoing.
Meanwhile the fight against corruption is being strengthened with the anticipated enactment of the Whistleblower Protection Bill; Witness Protection Bill; A nti-Corruption Amendment Bill; as well as the Asset s and Conflict of Interest Bill.
Further, the Private Voluntary Organisations (PVOs) Bill, is expected to enhance transparency and accountability within that sector, while also augmenting o ur fight to prevent the financing of terrorism and money laundering, through PVOs.
In order to improve the human rights environment in the country, the Abolition of the Death Penalty Bill is undergoing Parliamentary approval processes .
The Zimbabwe Human Rights Commission has been decentralised.
The establishment of the Zimbabwe Independent C omplaints Commission in line With Section 210 of the constitution, will undoubtedly enhance the culture of transparency and accountability in our security sector.
Ladies and Gentlemen; Since our last High-Level Structured Dialogue Platfo rm Meeting in June 2023, and following the successful National Harmomised General Elections
— Presidential Communications Zimbabwe 🇿🇼 (@DeptCommsZW) November 25, 2024
In August 2023, the reforms and modernisation of various aspects of our public sector have been scaled up.
Meanwhile, transformative infrastructure development projects across the country are changing the quality of life of our people.
The funding of these is mainly through domestic resources, and non-concessional external financing.
These should ordinarily be funded through long term concessional financing, including Public Private Partnerships (PPPs).
The successful implementation of our Arrears Clearance and Debt Resolution Strategy is key for Zimbabwe to unlock new concessional external financing, critical for achieving our economc development objectives.
I call for the continued support of the International Financial Institutions, Development Partners, our creditors and the international co mmunity for the Arrears Clearance and Debt Resolution Process.
As Zimbabwe transitions to the implementation of t he National Development Strategy 2, access to external concessional financing will be key for long-term funding of our projects and programmes.
I am looking forward to achieving the set objective of this Structured Dialogue.
I call for the continued support of our creditors and Development Partners as envisaged in the Roadmap to be presented to this Forum by the Minister of Finance, Economic Development and Investment Promotion.
We welcome, as a Government, the appointment of Global Sovereign Advisory and Kepler-Karst as financial and legal advisors, respectively.
This significant milestone was achieved through the support of the African Legal Support Facility, to whom I express my gratitude.
On behalf of my Government, I want to thank the African Development Bank and our Champion, Dr. A. A Adesina for the continuing financial and technical as sstance to this process.
Gratitude is equally extended to our High-Level Facilitator, Former President of the Republic of Mozambique, His Excellency J. A. Chissano for his support, including engagements with various stakeholders.
To our Development Partners, we are indeed appreciative of your unwavering backing and solidarity.
In conclusion, may I reiterate my Government’s strong determination to see the this Arrears Clearance and Debt Resolution Process realise our intended results.
We call on stakeholders to carry on working with us in pursuit of the resolution of Zimbabwe’s debt overhang, towards sustainable and inclusive economic growth.
I thank you all most sincerely for participating in this Forum and the invaluable Insights and contributions.
God bless you.
God bless Zimbabwe.
