Zimbabwe considers project-specific model for debt clearance

Zimbabwe is exploring a new model for clearing its debt that focuses on project-specific strategies, Finance and Investment Promotion Minister Professor Mthuli Ncube has revealed.

The approach aims not only to reduce the country's arrears but also to improve its credit profile and attract foreign investment, particularly from strategic partners such as China. Since the advent of the Second Republic, the government has tied economic stabilisation closely to resolving debt challenges, which have historically impeded sustainable growth.

The proposed model would see income-generating projects, funded by loans, used to service debt, creating a direct link between project performance and repayment. "Projects which generate an income, there is no reason why those projects cannot be used to pay back the loans in the first place," Minister Ncube said, citing Chinese-funded initiatives as potential candidates for this approach.

"This project-specific strategy is part of our broader commitment to clearing arrears, which remain an albatross in terms of economic policymaking, attracting investments, and improving our credit profile," he added.

The initiative reflects a shift in strategy, recognising that many loans were extended for specific infrastructure and development projects capable of generating revenue. By leveraging income from these projects, the government hopes to implement a more structured and sustainable debt repayment mechanism.

Minister Ncube further noted that the government is engaging creditors to negotiate tailored repayment strategies that account for the unique aspects of each project, demonstrating a proactive approach to financial management while fostering accountability.