Zimbabwe’s long struggle with sovereign debt has exposed a fundamental weakness in the international financial system: creditors devote considerable resources to assessing whether governments can repay their obligations, yet comparatively little is invested in independent institutions capable of scrutinising how those debts are accumulated and spent.
As developing economies pursue debt restructuring, arrears clearance and renewed access to international capital markets, economists are increasingly confronting a difficult question. Can sovereign debt sustainability be achieved through fiscal reforms and creditor negotiations without strengthening domestic accountability?
The issue has acquired fresh significance amid proposals to finance independent public-debt oversight through sovereign debt restructuring agreements and the recovery of stolen state assets.
Under one proposal, 5 percent of recovered assets or debt-service savings would be allocated to independently managed institutions responsible for monitoring public borrowing, government guarantees and expenditure commitments.
The argument is economically compelling, although its implementation raises important questions about fiscal sovereignty, institutional independence and the efficient allocation of scarce public resources.
Zimbabwe offers a particularly revealing case study.
In 2021, Finance Minister Mthuli Ncube faced criticism over government guarantees exceeding US$15 million associated with private borrowing through the Commercial Bank of Zimbabwe, amid allegations that parliamentary approval had not been obtained.
The Zimbabwe Coalition on Debt and Development subsequently challenged the government’s borrowing practices in court, securing a March 2023 order requiring legislation to clarify Parliament’s authority over public loans and guarantees.
According to the account of the litigation, the required legislation had not been gazetted by the court-imposed deadline, illustrating the gap between obtaining judicial remedies and securing their implementation.
The case raises a wider institutional question: what economic value does constitutional oversight provide when the institutions responsible for enforcing it lack sustainable financial resources?
The economics of sovereign accountability
Sovereign borrowing is not inherently problematic. Governments legitimately use debt to finance infrastructure, productive investment and public services that may generate economic returns over several decades.
The problem arises when borrowing decisions are disconnected from transparent appraisal, parliamentary authorisation and credible assessments of repayment capacity.
In public finance theory, this represents a principal-agent problem. Citizens, as the ultimate bearers of sovereign fiscal obligations, delegate borrowing authority to elected governments whose incentives may not always align with long-term national welfare.
Governments may prioritise politically attractive projects, postpone fiscal adjustment or accumulate contingent liabilities whose costs emerge only after guarantees are called.
Independent oversight helps reduce this information asymmetry.
For investors and creditors, transparent public accounts can improve the reliability of debt sustainability assessments and reduce uncertainty surrounding a country’s actual financial obligations.
This matters particularly for Zimbabwe, where sovereign risk, external arrears and limited access to affordable international financing continue to constrain economic development.
A credible accountability framework could contribute to a reduction in the country’s sovereign-risk premium over time, although improved governance alone cannot eliminate the effects of arrears, currency risk or weak repayment capacity.
Should creditors finance the watchdogs?
The proposal to reserve a proportion of debt-relief savings or recovered assets for independent oversight offers an alternative to conventional donor-funded civil society programmes.
Such arrangements could provide predictable financing for organisations monitoring public debt, procurement, fiscal disclosures and compliance with borrowing legislation.
International precedents already exist for linking financial settlements to independently monitored development objectives.
Nigeria’s recovery of approximately US$321 million in assets stolen under former military ruler Sani Abacha incorporated international monitoring arrangements, while Ecuador’s 2023 debt-for-nature transaction established dedicated financing for marine conservation.
These examples demonstrate that financial agreements can accommodate spending conditions and governance arrangements extending beyond conventional debt repayment.
However, applying the model to civil-society oversight would require careful institutional design.
A fixed 5 percent allocation, for example, may be excessive in some transactions and insufficient in others. Its economic justification should depend on the expected benefits of oversight, administrative costs and the opportunity cost of diverting resources from essential public services.
There is also a potential conflict of interest if organisations funded through creditor agreements become more accountable to external financiers than to the citizens whose interests they are intended to protect.
Independence must therefore mean freedom from both executive interference and creditor influence.
Zimbabwe’s deeper institutional challenge
For Zimbabwe, the central issue is not simply whether civil-society organisations receive more funding.
It is whether Parliament, the Auditor-General, the judiciary and independent public-finance institutions possess the authority, technical expertise and enforcement mechanisms necessary to scrutinise sovereign obligations.
Civil society can complement these institutions by analysing debt contracts, investigating contingent liabilities and demanding disclosure. It cannot substitute for constitutional institutions responsible for approving borrowing and enforcing financial legislation.
This distinction is particularly important as Zimbabwe pursues debt resolution and international financial re-engagement.
Creditors are likely to attach considerable importance to fiscal transparency, debt reporting and the treatment of government guarantees when assessing the country’s creditworthiness.
Yet sustainable reform must also address the incentives that encourage opaque borrowing in the first place.
Publishing comprehensive debt registers, disclosing state guarantees, strengthening parliamentary approval procedures and subjecting major public investments to independent economic appraisal would provide a more durable foundation for fiscal accountability.
Such reforms could also improve the quality of government spending by directing scarce capital towards projects with demonstrable economic and social returns.
Accountability as an investment in creditworthiness
The most important insight is that public-finance oversight should not be viewed exclusively as a governance expenditure.
It can also function as an investment in sovereign creditworthiness.
When investors have confidence in the accuracy of government accounts, the transparency of borrowing decisions and the credibility of fiscal institutions, uncertainty surrounding sovereign obligations can diminish.
That improvement may eventually translate into lower financing costs, longer borrowing maturities and greater access to international capital.
Nevertheless, the relationship is not automatic. Markets ultimately price sovereign debt according to repayment capacity, macroeconomic stability, institutional credibility and political risk.
For Zimbabwe, the opportunity lies in integrating stronger domestic oversight into the broader programme of fiscal consolidation, monetary stabilisation and external debt resolution.
Financing independent scrutiny through debt settlements could contribute to that process, but only if the arrangements are transparent, proportionate and institutionally accountable.
The real test of sovereign financial reform is not merely whether a government can negotiate relief from yesterday’s debts.
It is whether the institutions governing tomorrow’s borrowing are strong enough to prevent the same vulnerabilities from recurring.
About the Author
Brighton Musonza is a British-Zimbabwean economic and political commentator, business journalist and founder of The Zimbabwe Mail and The Zimbabwe Financial Mail. He holds an MBA from the University of Bradford School of Management and has a professional background in accounting, finance and business management.
His analysis focuses on macroeconomic policy, sovereign debt, monetary reform, capital markets, corporate governance and Zimbabwe’s economic development, drawing on academic economic frameworks and practical financial-sector experience.
Disclaimer
This article represents the author’s independent economic analysis and opinions. It is intended for informational and public policy discussion purposes and does not constitute financial, investment or legal advice. References to government policies, sovereign debt arrangements and proposed reforms are based on publicly available information and the author’s interpretation. Any policy recommendations are analytical proposals rather than established government or institutional positions. The views expressed are those of the author and do not necessarily represent the editorial position of The Zimbabwe Financial Mail or any institution mentioned.
