• Libya’s central bank, through Libyan Foreign Bank, has sued Zimbabwe in the UK over more than US$100 million in unpaid fuel-related debt dating back to a 2001
• The case highlights how Zimbabwe’s unresolved legacy debts continue to resurface through litigation
• The lawsuit adds to Zimbabwe’s US$23.4 billion external debt stock, much of it in long-standing arrears.

Harare - Libya’s central bank has escalated Zimbabwe’s unresolved external debt problem into a UK courtroom, suing the country’s finance ministry and state oil company for more than US$100 million according to Bloomberg.

The case is not an isolated legal dispute but another data point in a debt overhang that has distorted Zimbabwe’s fiscal choices for more than two decades.

The claim, filed in November 2024 in the UK High Court’s Commercial Division, was brought by Libyan Foreign Bank (LFB), an offshore arm of the Central Bank of Libya.

It relates to a 2001 fuel credit facility extended to Zimbabwe at the onset of the country’s economic collapse. Justice Richard Jacobs has given the Zimbabwean defendants until the end of the month to file a defence, confirming that the matter has moved beyond informal engagement and into full litigation.

According to court documents, Zimbabwe’s National Oil Infrastructure Company (NOICZIM) agreed to a US$90 million facility with LFB in 2001 and drew down close to half the amount over the following two years.

The funds were used to pay Oilinvest BV of the Netherlands for fuel imports at a time when Zimbabwe faced acute foreign currency shortages, declining production and shrinking access to traditional lenders.

The repayment record described by LFB is weak. Zimbabwe is alleged to have repaid just US$5.5 million between 2013 and 2023, leaving a balance that, once interest and penalties are applied, now exceeds US$100 million.

LFB further claims that Zimbabwean officials have acknowledged the outstanding debt in correspondence dating back to 2005, a point that strengthens the lender’s position that the obligation remains valid and enforceable.

The facility was reportedly backed by a sovereign guarantee issued by then finance minister Simbarashe Makoni, binding the state to NOICZIM’s liabilities.

Current finance minister Mthuli Ncube has since accepted that the case can proceed in the UK courts after initially indicating Zimbabwe would challenge jurisdiction  a reversal that suggests limited room to contest the substance of the claim rather than just its venue.

Zimbabwe currently carries a US$23.4 billion in external obligations, including arrears to multilateral lenders such as the World Bank and African Development Bank accumulated over more than 25 years. Those arrears have locked the country out of concessional funding and forced reliance on short-term, high-cost or resource-linked financing arrangements.

Private creditors have faced similar treatment, in 2022, Bloomberg reported that Zimbabwe was negotiating repayment of unpaid fuel bills to Trafigura Group through deliveries of gold and nickel valued at US$226 million a structure that reflects both foreign currency scarcity and limited fiscal space.

Such arrangements reduce immediate cash pressure but mortgage future resource revenues and weaken transparency.

The same pattern is evident in the government’s stalled US$3.5 billion compensation agreement for white commercial farmers whose land was seized during the fast-track land reform programme.

While the deal was positioned as a cornerstone of re-engagement with creditors, funding remains uncertain and payments have been slow, reinforcing scepticism among lenders.

The Libyan lawsuit highlights three structural issues. First, Zimbabwe’s debt stock is not static, unresolved obligations continue to compound through interest and legal costs, the state’s extensive use of sovereign guarantees for parastatals has converted operational failures into direct fiscal liabilities.

On the other hand , the absence of a comprehensive, time-bound debt restructuring framework means disputes resurface individually, often in foreign courts, rather than being resolved collectively.

As Zimbabwe seeks to attract capital and normalise relations with lenders, cases like LFB’s undermine the credibility of reform narratives.

They signal that historical liabilities remain enforceable, governance risks persist, and creditor hierarchy is unclear. Until these issues are addressed systematically, litigation  rather than investment will remain the dominant external financial interaction facing the country.

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