Zimbabwe’s Finance Minister Mthuli Ncube has acknowledged that the country’s escalating debt crisis is significantly hindering efforts to stabilize the economy.
Speaking in Harare this week, Ncube highlighted the challenges posed by soaring public debt, stagnant revenues, and shrinking fiscal space.
The Alarming Debt Situation
Zimbabwe’s public debt has skyrocketed to over $21 billion, which accounts for nearly 90% of the nation’s GDP.
Key creditors include the World Bank, the African Development Bank, and the Paris Club. Ncube expressed his concerns, stating:
“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 and an albatross that we need to remove from our necks so that the economy can move forward. This issue occupies most of my time, and it’s taking a toll on me.”
Ncube pointed out that Zimbabwe’s average economic growth of around 6% is significantly lower than the prevailing interest rates, indicating that the debt will continue to grow unless restructured effectively.
Impact on Public Services and Growth
The increasing debt burden restricts the government’s ability to fund essential public services and stifles economic growth prospects.
To address this pressing issue, Ncube revealed plans to divest from underperforming State-Owned Enterprises (SOEs) in order to raise funds for debt repayment.
The Zimbabwean government has also initiated discussions with 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 initiatives have encountered obstacles due to delays in implementing necessary governance reforms, which are crucial for clearing arrears and resolving the debt crisis.
Urgent Action Required
As Zimbabwe grapples with its mounting debt crisis, urgent action is needed to stabilize the economy and foster sustainable growth.
The government’s commitment to restructuring its debt and improving governance will be vital in navigating these challenges.
With public services at stake and economic recovery hanging in the balance, all eyes will be on how effectively Zimbabwe can address its financial woes moving forward.