Zimbabwe is in debt distress, and the country has been looking for solutions on how to emerge from it.
The Ministry of Finance’s Public Debt Management Office has recently released a medium-term debt management strategy that has the latest data on the extent of the country’s debt crisis. It lays out how much we owe, who we owe, how much debt we have taken on over the past year, and how much is expected over the next few years.
Here are some of the key takeaways from the strategy paper on the state of Zimbabwe’s debt crisis.
How much do we owe?
The total Public and Publicly Guaranteed (PPG) debt in December 2021 was US$17.2 billion. This was made up of external debt of US$13.4 billion (77.9%) and domestic debt of US$3.8 billion (22.1%). This total public debt includes blocked funds of US$3.533 billion and an obligation of US$3.5 billion to compensate white former farmers for improvements on resettled land.
Not only does Zimbabwe owe principal amounts, but the country also has arrears and penalties because of not paying its debts on time.
The country has piled up external debt arrears and penalties of US$6.6 billion. This includes penalties of US$2.01 billion by December 2021. Of the total external debt arrears, US$4.2 billion (63%) is due to the bilateral creditors, while US$2.4 billion (37%) is due to the multilateral creditors such as the World Bank and others.
Who do we owe exactly?
Zimbabwe owes US$5.6 billion to bilateral creditors – such as individual countries – and US$2.7 billion to multilateral creditors.
Of the total bilateral external debt, US$3.9 billion is owed to the Paris Club bilateral creditors – a group of countries – and US$1.8 billion is owed to the non-Paris Club bilateral creditors. For debts owed to financial institutions, US$1.5 billion is owed to the World Bank, US$711 million to the African Development Bank and US$358 million to the European Investment Bank.
The government’s decisions over the years to take over the central bank’s debt have added to the debt pile. The country owes US$111 million to creditors under the 2015 RBZ Debt Assumption Act, while US$4.9 billion is external debt on RBZ’s balance sheet.
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