Zimbabwe under pressure over debt clearance

Zimbabwe is facing increasing pressure to implement the key reforms demanded as part of the ongoing arrears clearance and debt resolution process. With international mediators aiming to conclude the process by next year, the country is expected to make significant progress in addressing long-standing economic and governance issues.

The debt resolution process, which began in December 2022, is being championed by African Development Bank (AfDB) President Akinwumi Adesina and facilitated by former Mozambican President Joaquim Chissano. Yesterday, Zimbabwe hosted the 6th High-Level Structured Dialogue Platform on national debt arrears, where stakeholders gathered to assess progress and discuss a roadmap for containing the country's debt crisis.

During the meeting, Adesina underscored the mounting issue of arrears, which he described as the "new debt," now standing at US$21 billion. While there has been ongoing contestation regarding the exact amount of the country's debt, Adesina highlighted the importance of addressing arrears as a critical step in the country's economic recovery.

The United States, which returned to the dialogue platform, noted that recent independent assessments of the dialogue's governance indicators revealed substantial work still to be done. Among the key areas needing improvement, the US highlighted judicial independence, freedom of association, civil society space, and other governance-related matters.

"Despite the challenges, our return to the dialogue reflects our commitment to the Zimbabwean people and the need for genuine political will to advance reforms," the US embassy said in a statement.

Adesina emphasized the need for Zimbabwe to make headway on key reforms, particularly in human rights, governance, and the electoral process. He pointed to ongoing discussions about the PVOs Bill (Private Voluntary Organisations Bill) and the issue of farmer compensation as central to the reform agenda. The International Monetary Fund's (IMF) Staff Monitoring Programme, due in January 2024, is expected to provide benchmarks for progress in these areas.

"It is my hope and expectation that our seventh meeting will focus on concluding the arrears clearance and debt resolution," Adesina stated. He added that a collective, time-bound conflict plan for debt resolution must be developed, and that a sovereign advisory firm, supported by the AfDB, had been engaged to create a detailed action plan and timeline for arrears clearance.

Adesina also called for clarity from France and Zimbabwe's development partners on the triggers and incentives needed to support the country's reform efforts. Despite challenges, he acknowledged significant progress in the governance pillar of the process, with partners agreeing to benchmark progress using internationally respected indices such as the World Justice Report, the Mo Ibrahim Index on African Governance, and Transparency International's Corruption Perception Index.

Chissano, in his remarks, said while progress had been made, challenges remain. He urged the Zimbabwean government to improve coordination of the dialogue process to ensure the speedy implementation of reforms. He also called for a review of nine sub-indicators that had registered negative assessments this year.

One of the major areas of focus has been land reform. Zimbabwe's government is working on introducing a bankable 99-year land lease, along with compensating farmers who lost land during the 2000 land reform program. A significant step forward was the allocation of US$35 million in the 2024 budget for farmer compensation - US$15 million under the Global Compensation Deal and US$20 million for farms covered by Bilateral Investment Promotion and Protection Agreements (BPAs).

On governance reforms, Chissano noted that the government has made strides in enhancing transparency in financial accounts and improving public sector accountability, as outlined in the National Development Strategy 1.

Finance, Economic Development, and Investment Promotion Minister Mthuli Ncube also outlined key upcoming dates for monitoring the progress of reforms, including the commencement of the IMF Staff Monitoring Programme in January 2025, a mid-year review in July, and a final assessment in September.

With the clock ticking on the arrears clearance and debt resolution process, Zimbabwe's success in meeting the conditions set by international partners will be crucial to the country's economic future.