HARARE – Zimbabwe has secured diplomatic backing from France and the United Kingdom for its debt resolution programme after the two countries agreed to co-chair a new Debt Consultative Group (DCG) under the country’s Structured Dialogue Platform, a development expected to accelerate engagement with international creditors and support efforts to restore access to concessional finance.
According to an official familiar with the negotiations, the new consultative mechanism will coordinate dialogue between Zimbabwe, bilateral and multilateral creditors, while supporting implementation of the country’s 10-month IMF Staff-Monitored Programme (SMP) and its broader arrears clearance and debt restructuring strategy.
The unnamed source said the initiative is expected to strengthen confidence in Zimbabwe’s reform agenda and advance the country’s plan to resolve approximately US$2.7 billion in external arrears targeted under the current debt resolution framework.
The announcement comes as the latest Mid-Term Budget Review shows Zimbabwe’s total public and publicly guaranteed debt rose modestly to US$21.8 billion at the end of 2025 from US$21.5 billion a year earlier, representing an increase of 1.4%.
Despite the increase, public debt stood at 37.4% of Gross Domestic Product (GDP), remaining below widely recognised international debt sustainability benchmarks and within the country’s statutory borrowing limits.
External arrears remain the principal obstacle
The Government’s debt profile remains broadly balanced between external and domestic obligations.
External debt totalled US$11.8 billion, accounting for 53.9% of the total portfolio, while domestic debt stood at US$10.1 billion, or 46.1%.
However, the composition of the external debt continues to present Zimbabwe’s greatest economic challenge.
Approximately US$8.1 billion, representing nearly 70% of external debt, consists of accumulated arrears that have built up over more than two decades, effectively restricting Zimbabwe’s access to concessional financing from international financial institutions.
The bilateral debt portfolio includes US$4.2 billion owed to Paris Club creditors and US$2.3 billion to non-Paris Club lenders.
Major multilateral obligations include approximately US$1.6 billion owed to the World Bank, US$759 million to the African Development Bank, US$758 million to the Trade and Development Bank and US$1.2 billion to Afreximbank.
Although Zimbabwe serviced US$307.5 million in external debt during 2025, economists say resolving longstanding arrears remains critical to unlocking cheaper international financing and attracting long-term investment.
Debt metrics remain relatively moderate
While Zimbabwe’s total debt remains substantial in nominal terms, economists note that the country’s debt burden compares favourably with many developing economies.
At 37.4% of GDP, Zimbabwe’s public debt remains comfortably below the 60% debt-to-GDP threshold commonly used by international financial institutions as a broad indicator of sustainability for emerging economies.
Government borrowing during 2025 amounted to just 1.5% of GDP, significantly below the 5.75% ceiling permitted under the Public Debt Management Act, reflecting what analysts describe as a cautious fiscal approach.
Domestic financing expands cautiously
The Government also raised approximately US$246 million through domestic borrowing from local financial institutions, including Ecobank Zimbabwe, CBZ Bank and Stanbic Bank.
Analysts say the measured use of domestic capital markets has helped finance public expenditure without significantly crowding out private sector lending, although maintaining that balance will remain important as financing needs increase.
Meanwhile, the Government issued a US$210 million guarantee to the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) to facilitate electricity imports, with outstanding guarantee exposure declining to US$102.3 million by year-end.
Reliable electricity supplies remain a critical requirement for Zimbabwe’s mining, manufacturing and agricultural sectors, making energy financing an important component of the country’s broader economic recovery strategy.
Governance reforms improve investor confidence
The latest debt report also highlights continued improvements in Zimbabwe’s public debt management framework.
According to Government data, the number of “red-rated” weaknesses identified under international debt management assessments has fallen significantly since 2020, reflecting stronger governance, improved transparency and enhanced debt reporting practices.
An official familiar with the Structured Dialogue process said greater transparency has strengthened confidence among development partners and international creditors.
“Progress on governance reforms has been recognised by creditors and is helping build momentum behind the debt resolution process,” the source said.
Debt resolution seen as gateway to investment
Economists argue that resolving Zimbabwe’s external arrears would fundamentally change the country’s financing landscape by restoring access to concessional funding from multilateral lenders, lowering sovereign borrowing costs and improving the country’s international credit profile.
Successful implementation of the IMF Staff-Monitored Programme, combined with sustained fiscal discipline and structural reforms, is also expected to encourage greater foreign direct investment while reducing financing costs for both Government and the private sector.
With France and the United Kingdom now assuming leadership roles in the Debt Consultative Group, Zimbabwe’s engagement with international creditors enters a new phase, offering renewed optimism that one of Africa’s longest-running sovereign debt disputes could move closer to resolution.
