China ‘not in the business of haircuts’ as Zimbabwe asks for debt reduction from creditors

Zimbabwe is implementing reforms in a bid to drag itself out of a debt crisis that has marred the country since Robert Mugabe was in power

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Zimbabwe is trying hard to get out of the debt crisis that has plagued the country since the days of Robert Mugabe, and is asking creditors for ‘haircuts’ to that end. Photo: AFP

Published: 10:00pm, 15 Jun 2024

As Zimbabwe attempts to lift itself out of a punishing debt crisis, it is asking for “deep haircuts” from its creditors, including China, according to its finance minister, Professor Mthuli Ncube.

But analysts say China is “not in the business of haircuts” and is unlikely to accept any reduction of the debt it is owed.

Ncube is seeking help from creditors to address the US$19.2 billion that the country owes, of which US$13 billion is external debt and US$6.2 billion is domestic. Most of the debt was accrued during the era of late former president Robert Mugabe – and most has remained unpaid for decades.

“Zimbabwe is currently in debt distress due to the accumulation of external debt payment arrears amounting to US$6.7 billion,” Ncube said.

“The external debt overhang is weighing heavily on the country’s development needs due to lack of access to international financial resources to finance Zimbabwe’s economic recovery and priority projects.”

“We are looking for a lot of haircuts … very deep haircuts and elimination of all penalties.”

According to Zimbabwe’s debt registry, bilateral external debt stands at US$6.2 billion but US$4.7 billion of the amount is in arrears – about 76 per cent of the total bilateral debt.