Debt crisis chokes Mthuli

LIVINGSTONE MARUFU

Finance Minister,Professor Mthuli Ncube, has made a rare and candid  admission, revealing that the country’s mounting debt crisis has become a relentless nightmare, severely undermining efforts to stabilise the economy.

Speaking in Harare this week, Professor Ncube, painted a grim picture of Zimbabwe’s financial state, where ballooning debt, stagnant revenues and shrinking fiscal space are combining to create an economic tinderbox.

Zimbabwe’s public debt has surged to over US$21bn, nearly 90% of the country’s GDP. Major creditors owed include the World Bank, the African Development Bank, the Paris Club and non-Paris Club.

This growing debt burden not only constrains the government’s ability to fund public services but also stifles prospects for economic growth.

“If there is anything that keeps me awake at night as the Finance Minister it’s this debt crisis,” admitted Professor Ncube during an address to captains of industry this week.

“The issue of debt is critical and albatross that we need to remove from our necks so that the economy can move forward. This issue occupies me for the most of my time [and it’s taking a toll on me].”

Professor Ncube lamented the unsustainable trajectory of Zimbabwe’s debt-to-GDP ratio, emphasising that without intervention, the government may be forced to resort to further borrowing or asset sales.

“What is more worrisome to me is that Zimbabwe’s average growth of around 6% is way lower than the interest rates growth. This means that our debt will continue to be increasing. That’s why we have to restructure our debt to ensure that the debt does not accumulate,” Professor Ncube said.

To address the crisis, Professor Ncube, revealed plans to dispose of underperforming State-Owned Enterprises (SOEs) to generate funds for debt payment.

“We are looking at various assets that we have. The bulk of the proceeds from  these disposals  will be directed towards settling debts, but restructuring remains critical,” Professor Ncube  explained.

The Zimbabwe Government has engaged international financiers through a high-level dialogue platform led by African Development Bank (AfDB) president Dr Akinwumi Adesina and former Mozambican President Joaquim Chissano.

However, these efforts have been hampered by delays in implementing key governance reforms, a critical component  of the arrears clearance  and debt resolution agenda.

Economists warn that the country’s rising debt levels and limited repayment capacity risk triggering a full-blown fiscal crisis.

“The current trajectory is unsustainable,” said economist Professor Gift Mugano.

“Zimbabwe is teetering on the edge of a debt trap where we are borrowing just to service existing debts.”

Experts recommend a multi-faceted approach to navigate the crisis.

This includes negotiating debt restructuring or forgiveness with international creditors while implementing robust domestic reforms.

“Debt restructuring is possible, but it requires Zimbabwe to demonstrate a commitment to governance reforms, fiscal discipline, and economic transparency,” said a senior economic analyst at the African Development Bank, adding that “Credibility is key.”

Domestically, measures such as improving revenue collection, curbing corruption, stabilising inflation and strengthening the local currency are critical.

Leveraging natural resources responsibly, especially in mining , could boost forex earnings.

For Professor Ncube, the balancing act of stabilising the economy while tackling the debt burden is immense.

He has called for consensus among stakeholders including the private sector, civil society and development partners.

“This (debt crisis) is not just a government problem; it is a national issue,” Professor Ncube said.

The scale of Zimbabwe’s debt crisis demands urgent  and bold action.

Without decisive reforms, the country risks deeper economic woes, further eroding the livelihoods of its citizens.

Professor Ncube’s candid acknowledgement of the crisis marks a significant shift in tone, but whether this will translate into meaningful change remains uncertain.

For weary Zimbabweans, the stakes are higher than ever as the nation confronts the daunting task of breaking free from its debt spiral , probably in 2025.