Zimbabwe needs G20 support to end debt crisis, says World Bank chief

By Antony Sguazzin

 

Zimbabwe’s best chance of exiting a 25-year debt default is to engage the Group of 20 nations to help formulate a solution and stop trying to work its way out of the quagmire itself, World Bank President Ajay Banga said. 

 

The southern African country owes the World Bank and other creditors a total of $21 billion and has tried numerous unsuccessful strategies to restore its access to global capital markets. Those ranged from attempting to repay its debts using the proceeds of metal sales and recently approaching 10 nations for help to raise $2.6 billion to pay its arrears. 

 

“Trying to figure it out on your own, you’ll be doing this for the next five years,” Banga said in an interview in Maputo, Mozambique’s capital. “They need to figure out a way to reach out to the G-20 and say, we raise our hand, we’d like to be part of this process.”

 

Zimbabwe first defaulted on repayments to the World Bank in 2000. Its debts to a host of multilateral institutions and bilateral lenders mounted amid a failed land-reform program and a quarter century of economic turmoil, shutting it out of international debt markets and limiting its ability to borrow even during the global pandemic and a recent devastating drought. 

 

The government has asked the African Development Bank to advise on clearing its debt with the institution’s outgoing president, Akinwumi Adesina, and former Mozambican President Joaquim Chissano asked to negotiate with creditors. It also hired Global Sovereign Advisory, a Paris-based consultancy, to help. The fact that Zimbabwean officials, including President Emmerson Mnangagwa, have been sanctioned by the US has complicated the process.

 

While Belarus, Syria and Eritrea are also in arrears to the World Bank, Zimbabwe’s default is by far the longest. South Africa, which currently holds the G-20 presidency, last month said it has been approached by Zimbabwe to try and garner the group’s support for a debt workout.

 

Zambia, Ghana and Ethiopia are among nations that have employed the G-20’s Common Framework, which was created in 2020 to help poor nations bring together a diverse set of creditors to restructure debts. While they have made progress in reaching deals, the process has been criticized for being too slow. 

 

Zimbabwe isn’t technically poor enough to be eligible to utilize the framework, yet Sri Lanka — a nation in a similar situation — approached the group in 2023 for help with dealing with its creditors.

 

“Start talking to the G-20 and the Paris Club” and whoever else has given them money and we can help, Banga said. “We try and bring an understanding of what write down you need to take. It takes a while.”

 

Zimbabwe’s Treasury didn’t respond to a request for comment.