Southern
African
nation’s
debt
pile
accounts
for
81%
of
gross
domestic
product,
and
clearing
it
will
be
a
tough
challenge
for
a
country
that
has
faced
numerous
financial
crises
in
recent
decades,
from
repeated
bouts
of hyperinflation to
multiple
unsuccessful attempts to
launch new
currency
regimes.
President
Emmerson
Mnangagwa
told
the
conference
that
Zimbabwe
is
negotiating
a
Staff
Monitored
Program
(SMP)
with
the
International
Monetary
Fund.
Securing
an
SMP
would
set
the
stage
for
required
policy
reforms,
African
Development
Bank
(AfDB)
President
Akinwumi
Adesina
told
the
conference.
“That
is
the
key,”
he
said,
adding
that
AfDB
stood
ready
to
offer
financial
support
to
cushion
Zimbabwe’s
economy
against
potential
adverse
effects
of
reforms.
Adesina
said
the
AfDB
also
had
money
available
from
a
special
fund
to
help
settle
Zimbabwe’s
arrears.
He
did
not
provide
any
figures.
Finance
Minister
Mthuli
Ncube
said
timelines
would
become
clear
by
mid-2025,
once
Zimbabwe
secured
bridge
financing
commitments
from
lenders
to
help
clear
the
arrears.
Analysts
say
paying
off
arrears
is
essential
for
an
economy
that
currently
cannot
even
access
money
from
the
IMF
–
the
lender
of
last
resort.
That’s
after
clearance
was
given
by
the
Sudanese
government.
“The
issue
of
arrears
is
a
major
albatross
around
our
neck,”
said
Prosper
Chitambara,
a
Harare-based
independent
economist.
“Once
the
arrears
are
cleared
it
will
be
cheaper
to
borrow
and
easier
to
attract
investment.”
UNSUSTAINABLE
SITUATION
Getting
on
track
with
bilateral
creditors
–
and
clearing
arrears
with
the
AfDB,
the
World
Bank
and
the
European
Investment
Bank
–
is
necessary
to
unlock
funding
for
Zimbabwe,
once
a
regional
breadbasket
that
now
struggles
to
feed
its
own
people.
“The
IMF
is
currently
precluded
from
providing
financial
support
to
Zimbabwe”
due
to
an
unsustainable
debt
situation
and
external
arrears,
an
IMF
spokesperson
said.
The
IMF
SMP
that
Zimbabwe
is
targeting
does
not
include
financial
assistance
or
require
approval
by
the
Fund’s
executive
board.
But
government
officials
say
it
would
help
Zimbabwe
demonstrate
a
return
to
sound
economic
policies.
The
government
already
missed
its
initial
goal
to
have
an
SMP
in
place
by
April,
as
well
as
a
second
deadline
last
month.
This
has
limited
IMF
engagement
to
technical
assistance,
such
as
budget
preparation.
DEBT
AND
DEFAULT
The
United
Nations
estimates
24
out
of
Africa’s
35
low-income
countries
are
at
high
risk
of
debt
distress,
and
since
2020,
Zambia
and
Chad
have
finalised
debt
reworks.
Ghana
is
wrapping
up
its
own
debt
rework
and
Ethiopia
is
in
the
midst
of
a
restructuring.
But
Zimbabwe
is
no
ordinary
default.
While
45%
of
its
burden
is
outstanding
debt,
the
rest
is
arrears
and
penalties,
according
to
a
2023
government
presentation.
The
Africa
Legal
Support,
an
AfDB
facility
that
helps
countries
deal
with
debt
distress,
is
paying
for
two
firms
–
the
Global
Sovereign
Advisory
Company
and
law
firm
Kepler-Karst
–
to
help
advise
the
government,
Ncube
said
ahead
of
the
conference.
Zimbabwe
has
only
been
paying
token
amounts
to
debtors,
including
16
bilateral
creditors,
Ncube
said,
but
gave
no
further
details.