Zimbabwe’s External Debt Exceeds $23 Billion as IMF Uncovers $2 Billion Discrepancy in Official Figures

The International Monetary Fund (IMF) has uncovered a significant discrepancy in Zimbabwe’s external debt figures, revealing that the southern African nation’s debt burden exceeds official government estimates by more than $2 billion—a finding that casts serious doubt on the country’s prospects for securing desperately needed debt relief from international creditors.

According to the IMF’s newly released 2025 Article IV Consultation Report, Zimbabwe’s total public and publicly guaranteed debt stood at a staggering $23.3 billion at the end of 2024, representing 72.9 percent of the country’s Gross Domestic Product. This figure substantially exceeds the $21 billion debt level that Zimbabwean authorities have officially acknowledged, exposing a major gap in the government’s debt accounting and transparency.

The revelation comes as Zimbabwe has been mounting an increasingly urgent campaign for debt relief with major Western creditors since the removal of long-time ruler Robert Mugabe in a military coup eight years ago. Despite sustained diplomatic efforts and multiple engagement platforms, the country has made little tangible progress toward resolving its mounting debt crisis.

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Echoing Earlier Warnings from Regional Institutions

The IMF’s findings align with earlier observations from the African Export-Import Bank (Afreximbank), which stated in its May 2025 country brief that Zimbabwe’s external debt was substantially higher than official government estimates suggested. This convergence of assessments from multiple independent financial institutions reinforces concerns about the reliability of Zimbabwe’s debt reporting and the true scale of the country’s fiscal challenges.

The underreporting of debt carries significant implications beyond mere accounting errors. International creditors and multilateral institutions rely on accurate debt figures when evaluating countries’ eligibility for various debt relief programs and when assessing the sustainability of their fiscal positions. Discrepancies of this magnitude can undermine trust and complicate negotiations for debt restructuring or relief.

Breaking Down Zimbabwe’s $23.3 Billion Debt Mountain

The IMF report provides a detailed breakdown of Zimbabwe’s debt composition, revealing the multi-layered nature of the country’s fiscal crisis. Of the $23.3 billion total debt, external debt accounts for $16.7 billion, representing 52.5 percent of GDP—a level that significantly constrains the government’s fiscal flexibility and economic policy options.

Perhaps most concerning is the accumulation of arrears—unpaid debt obligations that have been mounting for over two decades. Zimbabwe has been accumulating external arrears to its official creditors since the early 2000s, with these arrears now estimated at $7.4 billion, representing 23.2 percent of GDP. This massive arrearage reflects Zimbabwe’s prolonged inability to meet its debt service obligations and has effectively locked the country out of international capital markets.

More recently, the government has begun accumulating arrears to external commercial creditors as well, with these obligations estimated at $47.4 million at the end of 2024. While this figure is relatively small compared to official creditor arrears, it represents a worrying expansion of Zimbabwe’s default footprint into the commercial lending sphere.

Adding to the complexity, the government has suspended servicing some of its domestic debt obligations, amounting to $425 million in 2025. This domestic default, while smaller in magnitude than external arrears, creates additional complications for Zimbabwe’s economy by undermining confidence in government securities and constraining domestic credit markets.

The Historical Roots of Zimbabwe’s Debt Crisis

Zimbabwe’s current debt predicament has deep historical roots stretching back to the turn of the millennium. The country began defaulting on loan repayments to the World Bank, the IMF, and other international lenders in 2000 under the regime of the late Robert Mugabe. These initial defaults coincided with the launch of a controversial and chaotic land reform program that saw the seizure of white-owned commercial farms without compensation.

The land reform initiative, while addressing legitimate historical grievances about land ownership patterns inherited from the colonial era, was implemented in a manner that destroyed Zimbabwe’s agricultural sector—once the backbone of its economy. Large-scale commercial farms that had produced tobacco, maize, and other export crops were subdivided and redistributed, often to politically connected individuals rather than experienced farmers.

The agricultural collapse triggered a broader economic implosion characterized by hyperinflation, currency instability, unemployment, and widespread poverty. Zimbabwe’s international isolation deepened as Western nations imposed targeted sanctions on Mugabe’s regime, further constraining access to international financing and development assistance.

Throughout the 2000s and into the 2010s, Zimbabwe’s economic crisis intensified. The country experienced one of history’s most severe hyperinflation episodes, with inflation reaching astronomical levels that rendered the Zimbabwe dollar worthless. The government eventually abandoned its own currency in 2009, adopting a multi-currency system dominated by the US dollar and South African rand.

The Paris Club Creditor Landscape

Zimbabwe’s creditor profile reveals heavy exposure to Paris Club nations—a group of official creditors from major industrialized countries that coordinates debt treatment for debtor nations. The country’s biggest Paris Club creditors are Germany, France, the United Kingdom, Japan, and the United States, with a combined external debt stock amounting to $2.9 billion—accounting for 74 percent of Zimbabwe’s total Paris Club external debt.

This concentration of debt among major Western creditors has created both opportunities and challenges for Zimbabwe’s debt resolution efforts. On one hand, the Paris Club has established mechanisms and precedents for coordinating debt relief among official creditors. On the other hand, many of these creditor nations have maintained strained political relationships with Zimbabwe due to governance concerns, human rights issues, and the unresolved consequences of the land reform program.

The presence of significant debt owed to these Western nations also means that debt relief negotiations inevitably become entangled with broader political considerations, including demands for democratic reforms, respect for property rights, and adherence to rule of law—conditions that successive Zimbabwean governments have found difficult to fully satisfy.

The Structured Dialogue Platform: A Framework for Re-engagement

Since 2019, Zimbabwe has been utilizing the Structured Dialogue Platform (SDP), an initiative championed by former African Development Bank (AfDB) President Akinwumi Adesina and former Mozambican President Joaquim Chissano. The SDP was designed to create a structured framework for dialogue between Zimbabwe and its international creditors, addressing not just debt issues but also broader governance and economic reform concerns.

The platform operates on three main pillars: political and economic governance reforms, compensation for former farm owners affected by land reform, and arrears clearance and debt resolution. However, the IMF report notes that while progress has been made on some sub-components of these pillars, bilateral Paris Club creditors have insisted that meaningful re-engagement requires demonstrable advances across all three areas simultaneously.

This holistic approach reflects creditors’ determination to ensure that debt relief does not simply provide temporary fiscal relief without addressing the underlying governance and policy failures that created the debt crisis in the first place. However, it also creates a challenging coordination problem, as progress across all three pillars requires sustained political commitment and institutional capacity that Zimbabwe has struggled to demonstrate.

The Critical Role of Arrears Clearance

A particularly significant obstacle to Zimbabwe’s debt resolution is the need to clear arrears to international financial institutions, including the World Bank, African Development Bank, and European Investment Bank. These institutions typically cannot provide new financing to countries with outstanding arrears, creating a vicious cycle where Zimbabwe cannot access the resources needed to restore economic growth and generate the fiscal capacity necessary to service its debts.

The IMF report emphasizes that “a roadmap to clearing arrears to the international financial institutions will be essential to facilitate an eventual debt resolution.” However, implementing this roadmap faces a fundamental financing challenge: Zimbabwe lacks the resources to clear these arrears on its own, necessitating external support through what is known as a “bridge loan.”

A bridge loan would provide the temporary financing needed to clear arrears to multilateral institutions, thereby restoring Zimbabwe’s eligibility for new concessional financing that could support economic stabilization and reform. However, potential providers of bridge financing have made clear that they require certain preconditions to be met before committing resources.

Most significantly, creditors have called for an IMF Staff Monitoring Programme (SMP) to be in place before engaging on bridge financing. An SMP is a lighter-touch IMF program that involves regular monitoring and technical support without providing financing. It serves as a proving ground where countries can demonstrate their commitment to sound economic policies and their capacity to implement agreed reforms.

Zimbabwe’s $2.6 Billion Bridge Financing Quest

Earlier in 2025, Zimbabwe indicated that it was seeking debt relief and bridge financing totaling $2.6 billion through the SDP’s Arrears Clearance and Debt Resolution Process. This ambitious target reflects the scale of resources needed to clear multilateral arrears and establish a foundation for comprehensive debt restructuring.

However, the IMF has made clear that any program it could support through an SMP “would need to be broadly aligned with Article IV and recent capacity development advice.” This requirement effectively means that Zimbabwe must demonstrate readiness to implement the economic policy reforms that IMF staff have been recommending—including fiscal consolidation, monetary policy discipline, exchange rate reforms, and structural reforms to improve the business environment and economic governance.

The Zimbabwean authorities have also initiated discussions with key commercial creditors regarding debt payment moratoria. These negotiations aim to prevent the further accumulation of arrears to commercial lenders while broader debt restructuring frameworks are developed. However, commercial creditors typically demand higher returns to compensate for risk, making these negotiations particularly complex.

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Warnings from the World Bank Leadership

The urgency of Zimbabwe’s debt situation was underscored by remarks from World Bank President Ajay Banga in July 2025. Banga warned bluntly that if Zimbabwe attempted to resolve its debt crisis unilaterally without comprehensive engagement with international creditors, “it would remain in a debt trap for the next five years.”

This stark assessment reflects the reality that Zimbabwe’s debt problems are too large and complex to be resolved through domestic policy measures alone. Without coordinated debt relief from multiple creditor categories—official bilateral creditors, multilateral institutions, and commercial lenders—Zimbabwe cannot achieve the debt sustainability necessary for renewed economic growth and development.

The World Bank chief’s comments also highlight the importance of multilateral coordination mechanisms like the G20 Common Framework, created in 2020 to help poor countries bring together diverse creditors to restructure debts. However, Zimbabwe’s eligibility for such frameworks remains uncertain.

The Eligibility Question: Common Framework and HIPC

One of the most significant complications facing Zimbabwe’s debt resolution efforts is uncertainty about its eligibility for established international debt relief mechanisms. The IMF report notes that “it is not clear whether Zimbabwe would be eligible for treatment under the G20 Common Framework or the Heavily Indebted Poor Countries (HIPC) Initiative.”

Several factors complicate Zimbabwe’s eligibility. First, the country faces ineligibility due to protracted arrears to multilateral creditors—a catch-22 situation where the arrears that make debt relief most necessary also disqualify Zimbabwe from accessing it through standard channels.

Second, in the case of the HIPC Initiative, Zimbabwe’s income level exceeds the required International Development Association (IDA) eligibility criteria. While Zimbabwe certainly experiences widespread poverty and development challenges, its per capita income places it above the threshold for IDA-only status, technically disqualifying it from HIPC treatment designed for the world’s poorest countries.

However, the IMF notes that precedents exist for creative solutions. The report references cases like Sri Lanka and Suriname, where “official creditors may be willing to provide an ad hoc treatment consistent with restoring debt sustainability” even when standard eligibility criteria are not met. This suggests that Zimbabwe might still secure meaningful debt relief through customized arrangements rather than off-the-shelf programs.

Policy Reforms: Necessary but Insufficient

The IMF’s assessment of Zimbabwe’s economic policies is sobering. The report states clearly that “current policies are insufficient to restore debt sustainability,” emphasizing that resolving the debt crisis will require “a balanced mix of fiscal consolidation, strengthened public debt management, growth-promoting structural reforms, and external arrears resolution—paving the way for new financing from multilateral and bilateral creditors.”

This multifaceted prescription reflects the complexity of Zimbabwe’s challenges. Fiscal consolidation—reducing budget deficits and controlling spending—is necessary but politically difficult in a country where government employment serves as a social safety net and where public services are already severely constrained.

Strengthened public debt management involves not just accurate accounting—where current deficiencies are evident—but also strategic decisions about borrowing sources, debt composition, and risk management. Zimbabwe’s recent history of accumulating expensive commercial debt and inadequately managing existing obligations demonstrates significant capacity gaps in this area.

Growth-promoting structural reforms encompass a wide range of policy changes: improving the business environment, strengthening property rights, reforming state-owned enterprises, addressing corruption, modernizing infrastructure, and creating conditions that attract private investment—both domestic and foreign. Each of these reform areas involves politically sensitive choices that affect powerful constituencies.

The China Dimension

An important factor in Zimbabwe’s rising debt stock has been its increasing reliance on infrastructure loans from China. As traditional Western creditors remained distant due to political tensions and governance concerns, Zimbabwe turned to Chinese financing for roads, power plants, telecommunications infrastructure, and other projects.

However, Zimbabwe has proven unable to service these Chinese loans due to its ongoing economic crisis characterized by hyperinflation, currency instability, and low growth. This creates additional complications for debt resolution efforts, as Chinese creditors operate somewhat outside the traditional Paris Club framework and may have different priorities and negotiating styles than Western official creditors.

China’s role as both a major creditor and an important trading partner gives it significant leverage in Zimbabwe’s debt situation. Any comprehensive debt resolution will require Chinese participation, yet coordinating between Chinese institutions and traditional Western creditors has proven challenging in various African debt contexts.

The Urgency of Zimbabwe’s Situation

Zimbabwean authorities have emphasized the urgency of resolving the debt crisis, noting that “financing options have narrowed due to constrained access to concessional financing from official sector creditors, limited access to non-concessional commercial lenders, and challenges in the domestic capital market.”

This narrowing of financing options creates a dangerous dynamic. Without access to external financing, Zimbabwe struggles to fund critical infrastructure investments, social services, and economic reforms. The resulting economic stagnation makes debt service even more difficult, while the accumulation of new arrears further damages creditworthiness and reduces future financing prospects.

The domestic capital market faces its own challenges. The government’s suspension of service on some domestic debt obligations has undermined confidence in government securities, making it difficult to raise financing domestically at reasonable interest rates. This forces greater reliance on central bank financing—essentially printing money—which fuels inflation and currency depreciation, further destabilizing the economy.

A Fourth Pillar: Bringing Creditors Together

In recognition of these challenges, Zimbabwean authorities have announced plans to launch a fourth pillar under the Structured Dialogue Platform, focused specifically on debt resolution. This pillar aims to bring creditors together to provide regular updates on the government’s roadmap to restoring debt sustainability.

The IMF report notes that authorities have highlighted recent progress under the SDP, including “an initial payment to farmers covered by bilateral investment agreements,” which has been “welcomed by partners.” This reference relates to the controversial compensation issue for former farm owners—predominantly white commercial farmers who lost land during the land reform program.

Zimbabwe has committed to compensating these farmers, many of whom are protected by bilateral investment treaties that their governments signed with Zimbabwe. Making initial payments demonstrates good faith and addresses one of the key obstacles to improved relations with Western creditors. However, the total compensation liability runs into billions of dollars, creating another layer of fiscal pressure.

The Sobering Reality: No Quick Solutions

The IMF’s comprehensive analysis paints a sobering picture of Zimbabwe’s debt situation. With debt exceeding $23 billion, massive accumulated arrears, uncertainty about eligibility for standard relief mechanisms, constrained financing options, and the need for deep structural reforms, Zimbabwe faces a long and difficult path toward debt sustainability.

The $2 billion discrepancy between official figures and IMF assessments further complicates matters by raising questions about data quality, institutional capacity, and transparency—all factors that creditors consider when evaluating restructuring proposals.

While Zimbabwean authorities “broadly agree with the unsustainable debt assessment and reiterated their commitment to the re-engagement process,” commitment alone is insufficient. Concrete progress on all three current SDP pillars, successful implementation of an IMF Staff Monitoring Programme, mobilization of bridge financing, and coordination among diverse creditors will all be necessary prerequisites for meaningful debt relief.

The international community faces its own dilemma. Allowing Zimbabwe to languish in debt distress perpetuates humanitarian suffering and economic stagnation, potentially creating broader regional instability. Yet providing debt relief without adequate policy reforms and governance improvements risks moral hazard and could prove ineffective if underlying problems remain unaddressed.

For Zimbabwe’s 15 million citizens, the debt crisis represents more than abstract financial calculations. It translates into inadequate healthcare, failing schools, crumbling infrastructure, limited economic opportunities, and continued poverty. Breaking free from this debt trap is essential not just for fiscal sustainability but for human development and national dignity.

The coming years will reveal whether Zimbabwe can navigate the complex requirements for debt resolution while implementing the deep reforms necessary for sustainable development, or whether the country will remain trapped in the cycle of crisis that has defined its recent history.

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By: Montel Kamau

Serrari Financial Analyst

9th October, 2025