“Zimbabwe is currently in a debt crisis with external debt arrears amounting to $6.7 billion,” Ncube said.
“Zimbabwe's lack of access to international financial resources to fund its economic recovery and priority projects has resulted in an excessive external debt burden weighing heavily on the country's development needs.”
“We want significant sentence reductions … very significant sentence reductions and the elimination of all penalties.”
According to Zimbabwe's debt register, its bilateral external debt is $6.2 billion, of which $4.7 billion is in arrears, about 76 percent of its total bilateral debt.
Harare owes $4.1 billion to Paris Club creditors, an informal group of mostly Western creditors working on sustainable debt relief, but most of that debt – about 98 percent, or $4 billion – has been in default since Zimbabwe fell into financial trouble two decades ago.
Zimbabwe's five largest Paris Club creditors are Germany, France, the UK, Japan and the US, accounting for $3.1 billion, or 75 percent of the Paris Club debt.
“We are in discussions with all creditors,” Ncube said in an interview on the sidelines of the African Development Bank's annual meeting in the Kenyan capital, Nairobi, in May.
As part of resolving its financial difficulties, Harare is planning far-reaching economic and governance reforms to enable it to access international financial markets. To this end, it has established the Structured Dialogue Platform for Arrears Clearance, Debt Relief and Resolution to meet with creditors and development partners in 2022 to discuss reforms.
The process to resolve the crisis is being led by Mozambique's former president, Joaquim Chissano, and African Development Bank President Akinwumi Adesina.
The United States first imposed sanctions on Zimbabwe in 2001 in retaliation for controversial forced farm land confiscations under President Robert Mugabe. Between 2000 and 2001, around 4,000 white Zimbabwean commercial farmers were evicted from their land, often by violent means.
At the time, the United States imposed targeted sanctions on certain Zimbabwean government officials, followed in 2002 by further sanctions by the European Union, which effectively cut off access to funds from international markets, including from multilateral lending institutions such as the IMF and the World Bank.
Harare has pledged to implement sweeping reforms to escape the long shadow of Mugabe's land seizures, including a planned $3.5 billion total in compensation for evicted farmers, with $55 million earmarked for this purpose in the 2024 budget.
Chisano, the lead negotiator in the debt talks process, said 80 percent of the country's debt is in arrears.
“Clearing arrears and resolving the debt crisis is crucial not only for Zimbabwe but also for SADC. [Southern African Development Community],” He said.
But he said the Zimbabwean government could not implement the reforms alone and called on international partners to consider providing support.
In April, Zimbabwean media reported that China had written off an “unspecified” amount of interest-free loans it had received during Mugabe's term in office.
“China attaches great importance to resolving Zimbabwe's debt problem,” Zhou said at the time. “China is willing to strengthen communication with the Zimbabwean government and make an appropriate statement through friendly consultations. As a concrete measure, China has written off Zimbabwe's interest-free loans that were due by the end of 2015.” The ambassador did not disclose the amount of the loans that were written off.
But there have been no recent debt forgiveness offers from China, Bumunbe said. “We checked with the embassy when the reports came in,” he said. “They didn't say anything about debt forgiveness.”
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China to donate $140 million parliament building to Zimbabwe
China to donate $140 million parliament building to Zimbabwe
“We believe that the Zimbabwean government will continue to strive to create a favorable business environment for the scaling up and strengthening of the mining sector, and we hope that Chinese companies will continue to invest in Zimbabwe's mining sector based on Zimbabwe's needs and market principles,” Zhou said.
Besides lithium, Chinese companies have significant interests in tobacco growing and processing. Other projects financed by Chinese financing include Hwange Units 7 and 8, Kariba South Power Station, Robert Gabriel Mugabe International Airport Expansion Project, and Victoria Falls Airport Upgrade Project.
But while Ncube may be asking Zimbabwe's creditors for “debt relief”, Charlie Robertson, head of macro strategy at asset manager FIM Partners, said China was unlikely to agree to a debt write-off.
“China has always been reluctant to accept debt relief but will accept deferred interest and principal payments,” Robertson said.
This is a view shared by Ali Khan Satchu, a sub-Saharan Africa geopolitical analyst.
“China is certainly being supportive, but they're not in the haircut and cancellation business,” Satsch said.
“Zimbabwe is certainly less liquid but has a valuable balance sheet, but they too could negotiate a swap of minerals for debt,” Satchu said.
He said the biggest challenge for Mnangagwa's government was the continued negative impacts of the Mugabe era.
“The current administration has so far been unable to solve that problem,” Satchu said.
“Obviously, some sort of properly funded compensation program would solve that issue and allow the government to negotiate.”
