Here’s how much we owe – The Zimbabwe Mail
Zimbabwe is over-indebted and the country is looking for solutions to get out of it.
The Public Debt Management Office of the Ministry of Finance recently published a medium-term debt management strategy which contains the most recent data on the extent of the country’s debt crisis. It shows how much we owe, who we owe, how much debt we have incurred in the past year, and how much we expect over the next few years.
Here are some of the key takeaways from the strategy paper on the state of the debt crisis in Zimbabwe.
How much do we owe?
Total public and publicly guaranteed (PPG) debt as of December 2021 was $17.2 billion. This consisted of an external debt of US$13.4 billion (77.9%) and an internal debt of US$3.8 billion (22.1%). This total public debt includes blocked funds of $3.533 billion and a $3.5 billion obligation to compensate former white farmers for improvements to resettled land.
Not only does Zimbabwe owe amounts in principal, but the country also has arrears and penalties due to not paying its debts on time.
The country has accumulated external debt arrears and penalties of $6.6 billion. This includes penalties of $2.01 billion by December 2021. Of total external debt arrears, $4.2 billion (63%) is owed to bilateral creditors, while $2.4 billion dollars (37%) are owed to multilateral creditors such as the World Bank. Bank and others.
To whom exactly do we owe?
Zimbabwe owes US$5.6 billion to bilateral creditors – such as individual countries – and US$2.7 billion to multilateral creditors.
Of the total bilateral external debt, US$3.9 billion is owed to Paris Club bilateral creditors – a group of countries – and US$1.8 billion is owed to non-Paris Club bilateral creditors. For debts to financial institutions, $1.5 billion is due to the World Bank, $711 million to the African Development Bank and $358 million to the European Investment Bank.
Government decisions over the years to take on central bank debt have added to the debt pile. The country owes $111 million to creditors under the RBZ Debt Assumption Act of 2015, while $4.9 billion is external debt on the RBZ balance sheet.
What’s new on Chinese loans?
According to a recent report by Finance Minister Mthuli Ncube to Parliament, Zimbabwe has borrowed $2.7 billion from China since 1980. Outstanding debt to China as of August 2022 stood at $1.768 billion, did he declare.
Most Chinese loans have been borrowed for infrastructure projects.
Of the outstanding loans, Zimbabwe has borrowed US$998 million from the China Export-Import Bank for the Hwange 7 and 8 power units. Last year, the bank released US$24 million for the project. But the medium-term debt management office report shows that, again, Zimbabwe is struggling to repay some of the outstanding Chinese loans.
Report says China is not disbursing as many loans as needed because Zimbabwe is in loan arrears for Victoria Falls Airport ($65.36m), Phases I and II of NetOne network expansion ($66.65 million) and TelOne National Broadband. Expansion project ($8.0 million).
The Treasury says, “The government is currently working with defaulting entities to set aside resources for the clearance of these unpaid arrears.”
How many loans did we receive last year?
In total, in 2021, Zimbabwe has received $35.9 million from ongoing loan agreements.
Apart from the Hwange power station loans, Zimbabwe also secured $3.9 million from India Exim Bank’s $28.6 million loan for the Deka pumping station. This is a project to bring water from the Zambezi to the new power stations in Hwange.
Zimbabwe also received $8 million from the OPEC Fund for International Development (OFID). The money is used for social projects as well as to rehabilitate irrigation systems throughout the country.
From 2022 to 2025, Zimbabwe expects to receive loan disbursements of $556.4 million. This includes $293 million for Hwange 7 and 8 Power Stations, $20 million for Deka Pump Station, $71 million for RG Mugabe International Airport, NetOne Network Expansion Phase III ( $43 million) and the Bulawayo Thermal Power Plant ($82 million).