• Treasury is seeking US$2.7 billion to clear World Bank, AfDB and EIB arrears while domestic arrears have climbed to US$2.1 billion, creating competing demands on public finances
• The quality of the arrears clearance financing matters as much as the payment itself
• Debt resolution is now an execution story, not a negotiation story, and the next phase will be determined by reform delivery, domestic arrears reduction and the financing structure

Harare- Zimbabwe’s debt resolution programme has reached the point where its credibility will be judged by two payments moving in opposite directions across the same public balance sheet. Treasury needs about US$2.7 billion to clear arrears owed to the World Bank, African Development Bank and European Investment Bank, and at the same time, domestic arrears owed to service providers, holders of government securities and mining companies have already reached about US$2.1 billion.

This is the binding constraint hidden beneath the July 2026 arrears clearance roadmap. Zimbabwe can regain access to international financial institutions only after settling historical external arrears. The settlement loses part of its economic value where the financing process leaves local contractors, miners and bondholders carrying unpaid government obligations. The country therefore has to clear one arrears system without expanding another.

The second edition of the Structured Dialogue Platform report places the international financial institution payment between the current International Monetary Fund Staff Monitored Programme and Zimbabwe’s eventual access to an IMF financing programme, concessional development funding and comprehensive bilateral debt restructuring. The framework for creditor engagement has been established, and the immediate task is raising the capital required to convert reform progress into financial eligibility.

Zimbabwe’s total public and publicly guaranteed debt stood at US$21.8 billion at the end of December 2025, equivalent to 37.4% of GDP. External obligations accounted for US$11.8 billion and domestic debt reached US$10.1 billion. The debt ratio alone understates the pressure because debt service depends on the currency, maturity, interest cost, arrears status and revenue available for repayment.

The decisive transaction is smaller than the US$21.8 billion headline. Zimbabwe owes the World Bank US$1.612 billion, including US$1.546 billion in arrears. The African Development Bank exposure stands at US$759 million, with US$740 million overdue. The European Investment Bank is owed US$441 million, including US$435 million in arrears and penalties. These three obligations create a clearance requirement of about US$2.7 billion before normal lending relationships can resume.

The arrears represent 95.9% of the World Bank balance, 97.5% of the AfDB balance and 98.7% of the European Investment Bank exposure. The institutions are therefore carrying almost entirely nonperforming historical claims. Zimbabwe remains outside the concessional financing channels they use to fund public infrastructure, social programmes and institutional reform.

The Structured Dialogue Platform has created a formal route through this impasse. Government, creditors and development partners now work through three reform pillars covering economic stability, governance and land tenure together with compensation obligations. The process has moved from building consensus into implementing reform matrices and recording measurable progress.

The commercial value of this transition rests on creditor behaviour. International financial institutions do not reopen lending because meetings have become more frequent. They require evidence that fiscal, monetary, governance and legal commitments can survive across several review periods. The product Zimbabwe is building is creditworthiness.

The IMF Staff Monitored Programme provides the macroeconomic component of that credibility. Zimbabwe reached staff level agreement in February 2026, secured IMF management approval in April and completed an agreement on the first programme review in July following the June mission. The programme supplies no direct funding. Its value comes from independent monitoring of fiscal policy, monetary management and structural reform delivery.

Successful completion creates the policy history required for an IMF supported financing programme. That programme would give other creditors a common macroeconomic framework for restructuring decisions and new lending. Failure would delay the arrears clearance package because potential financiers would have limited assurance that the new obligation could be serviced without a return to monetary financing, expenditure arrears or exchange rate instability.

The governance pillar carries the same financial consequence. Technical meetings recorded between August 2025 and July 2026 covered public transparency, anticorruption, accountability, human rights and the whistleblower and witness protection framework. These issues govern the probability that public funds will be tracked, contracts will be enforced and policy commitments will remain credible after financing is secured.

The land pillar addresses compensation of former farm owners and investors protected under bilateral agreements. These obligations are legal claims against the state and a continuing test of property rights. Progress reduces unresolved liabilities and strengthens the investment environment. The commercial gains increase where the land tenure programme also produces instruments accepted by banks as security for long term agricultural financing.

Zimbabwe has therefore entered a proof phase. Macroeconomic stability, governance measures and compensation payments must continue long enough to change creditor assumptions about future state behaviour. A single successful review establishes direction, while repeated completion establishes a financing record.

Token payments support this process by demonstrating continuing recognition of creditor claims. The AfDB has described these payments as confidence building measures. Their financial size remains minor against arrears measured in billions. Their institutional value comes from maintaining engagement while the main clearance package is being assembled.

Domestic Arrears Have Become the Immediate Credibility Risk

The external process is advancing during a sharp rise in obligations owed inside Zimbabwe. Domestic expenditure arrears to service providers increased from US$34 million at the end of 2024 to US$1.361 billion at the end of 2025. The increase amounted to US$1.327 billion within one year and multiplied the stock about forty times.

Treasury attributed part of the increase to wider coverage of obligations that had previously remained outside the published debt perimeter. The disclosure improves transparency and reveals the size of unpaid work already delivered to Government.

Road development, dam construction, water supply projects and the agricultural input support programme account for 77.3% of the expenditure arrears. The Office of the Auditor General is reviewing these claims, with Treasury responsible for validating and reconciling the remaining 22.7%.

This is a corporate liquidity problem carried within the sovereign debt system. Contractors complete infrastructure and wait for payment certificates to convert into cash. Input suppliers finance government agricultural programmes from their working capital. Banks lend to companies whose receivables depend on Treasury settlement. Subcontractors and employees absorb the delays through weaker orders, slower wages and reduced activity.

The unpaid invoices function as involuntary financing to Government. The state receives roads, dams, water infrastructure and agricultural inputs without settling the corresponding cash obligation on schedule. Suppliers become creditors without choosing the size, maturity or interest terms of their exposure.

Total domestic arrears reached US$2.119 billion once arrears on government securities of US$459 million and mining company obligations of US$299 million are included. The figure is equivalent to almost four fifths of the US$2.7 billion required to clear the three major international financial institutions.

This creates the central contradiction facing the roadmap. Zimbabwe needs to convince external creditors that its payment behaviour has changed during a period when unpaid domestic obligations have increased materially. The international process will therefore be judged partly through the direction of domestic arrears.

A credible programme requires a quantified payment schedule for local service providers. Treasury should separate audited claims from disputed amounts, publish settlement dates by sector and prevent new obligations from entering the arrears stock. Banks financing contractors need visibility over payment timing so that working capital facilities can be structured against credible cash flows.

The Mining Escrow Model Shows Where Secured Debt Transfers Pressure

Zimbabwe’s existing Afreximbank facilities provide a practical example of the financing risk attached to export backed borrowing.

Treasury owed Zimplats, Unki and Mimosa US$264 million at the end of December 2025 for debt service undertaken through mining export proceeds. The structure supports a US$1.4 billion consolidated Afreximbank facility assumed from the Reserve Bank in 2023 and a separate US$400 million central government facility contracted during the same year.

Export proceeds from the three mining companies are deposited directly into an offshore Afreximbank debt servicing escrow account through surrender requirements. Treasury is then expected to reimburse the miners in ZiG at the prevailing exchange rate.

The mechanism gives the lender direct access to foreign currency before the proceeds enter the wider domestic system. It strengthens repayment certainty and keeps the external facility performing. Delayed reimbursement shifts the liquidity burden onto the mining companies whose exports funded the payment.

The lender can therefore remain current while Government accumulates a new obligation to the private companies supporting the facility. Sovereign arrears are transferred from the offshore creditor to domestic producers.

This matters for the US$2.7 billion clearance package because the roadmap includes the possibility of financing supported by Zimbabwean assets. Any facility secured through gold, platinum, lithium, tobacco or other export earnings could use a similar collection structure. The strength of the collateral would lower lender risk, while the reimbursement obligation would create a direct claim on Treasury cash and foreign currency resources.

The mining house arrears show that security alone does not create sustainability. The facility must contain a funded mechanism that reimburses the companies providing export proceeds. Without this, Zimbabwe could clear international financial institution arrears and create larger unpaid obligations to the sectors generating the country’s foreign currency.

The Ministry of Finance and the Public Debt Management Office should therefore disclose any proposed security package before commitment. The information required includes the assets or revenue streams pledged, the collection mechanism, interest rate, maturity, grace period, repayment currency, governing law and process for releasing security after refinancing.

Meanwhile, the roadmap identifies official support and asset backed financing as potential routes for settling international financial institution arrears. Each route changes the public balance sheet differently.

Official concessional finance offers longer maturities and lower interest costs. It aligns with the purpose of restoring debt sustainability and reopening development lending. Its availability depends on creditor consensus, performance under the Staff Monitored Programme and agreement on how the financing burden will be shared.

Asset backed financing can be arranged through a narrower group of lenders and may move faster. It can also place strategic revenues, mineral exports or public assets behind a new commercial obligation.

The transaction creates value where the concessional capital unlocked after clearance exceeds the financing cost and economic encumbrance of the instrument used to make the payment. Clearing US$2.7 billion at high commercial rates could reopen World Bank and AfDB funding and consume a large part of the fiscal benefit through debt service at the same time.

Treasury’s 2025 domestic borrowing provides a useful pricing benchmark. Government concluded loans totalling US$246 million with CBZ, Ecobank and Stanbic at an average interest rate of 10.38% and maturities ranging from 12 to 66 months. Ecobank advanced US$80 million at 7.5%, CBZ provided US$148 million through two loans priced at 12%, and Stanbic supplied US$50 million at 10%.

A US$2.7 billion clearance facility priced near 10.38% would create annual interest costs of about US$280 million before principal repayments and fees. That cost would compete with infrastructure, public wages, agricultural support and existing debt service.

The package therefore requires materially lower pricing and longer maturity than the facilities available from domestic commercial banks. A short commercial instrument would replace overdue concessional debt with expensive secured debt.

The strongest structure would combine official support with long dated bridge financing that can be refinanced after the IMF programme and international financial institution lending resume. The security should reduce as refinancing occurs. Any claim over commodity or public asset revenues should carry a valuation, repayment ceiling and termination mechanism.

Domestic Debt Is Competing for the Same Foreign Currency

The classification of US$10.1 billion as domestic debt can obscure the currency risk. Most of the portfolio is denominated in US dollars through Treasury bonds, compensation obligations and other legacy liabilities. External debt and domestic debt therefore compete for the same foreign currency earning capacity.

Government securities accounted for US$5.083 billion of domestic debt at the end of 2025. Compensation obligations to former farm owners stood at US$2.988 billion. Domestic expenditure arrears reached US$1.361 billion. Mining house arrears added US$299 million and domestic loans contributed US$330 million.

The maturity profile intensifies the pressure. Before restructuring, principal and interest obligations on US dollar Treasury bonds reached US$931.3 million for 2026. Reprofiling reduced the 2026 amount to US$671.8 million, consisting of US$545.4 million in principal and US$126.4 million in interest.

The restructuring creates immediate fiscal room and shifts payments into later years. Principal repayments rise to US$476.9 million in 2031, US$577.5 million in 2032 and US$497 million in 2033. The pressure has moved across the maturity curve and remains attached to future foreign currency cash flows.

The ZiG denominated Treasury bond portfolio carries a shorter refinancing horizon. About 70% of the securities mature during 2026 and the entire portfolio matures by the end of 2027. This leaves Treasury needing to repay or roll over most of the local currency bond stock during the same period in which it is assembling the international arrears package.

The state therefore faces several concurrent demands. It must settle domestic contractors, reimburse miners, service Treasury securities, continue compensation payments and mobilise external arrears financing.

The 37.4% debt to GDP ratio does not measure this cash flow concentration. The relevant risk lies in the annual payment profile against fiscal revenue, export receipts and usable reserves.

Reentry Matters Because Zimbabwe Is Paying for Infrastructure Through Higher Corporate Costs

Clearing international financial institution arrears would add a class of financing Zimbabwe has largely lost for more than two decades. World Bank and AfDB resources carry longer maturities and can fund projects that the domestic budget, commercial banks and private companies cannot finance efficiently.

The opportunity cost is visible across business balance sheets. Manufacturers invest in generators and solar systems because electricity transmission remains unreliable. Mining companies finance roads, water and power around individual projects. Retailers and logistics companies carry additional transport and inventory costs. Banks operate in an economy where the sovereign cannot access the full range of multilateral guarantees and development funding.

The Structured Dialogue report identifies railways and energy transmission as examples of the infrastructure that could benefit from restored financing. These systems would improve the productivity of multiple sectors at the same time and lower the capital companies currently commit to private substitutes.

The value of clearance therefore extends beyond reduced interest charges. It lies in reopening long dated financing for public assets whose economic returns spread across the private sector.

This makes the quality of the funding instrument decisive. Zimbabwe should not pledge the strongest export earnings for an extended period under an expensive commercial facility and leave insufficient foreign currency available for the companies and infrastructure expected to drive repayment.

The Three Year Support Window Defines the Real Timeline

The AfDB supported the Structured Dialogue Platform through an initial US$4 million grant running from 2022 to June 2026. A second US$4 million grant approved in May 2026 will fund the Zimbabwe Arrears Clearance Dialogue Enhancement Project over 36 months.

The three year implementation period provides a realistic guide to the duration of the remaining process. Zimbabwe has to complete the Staff Monitored Programme, secure arrears financing, make the clearance payment, qualify for an IMF financing programme and conclude bilateral restructuring agreements.

Each stage depends on acceptance of the previous one. The process can accelerate where reform delivery and official financing align. Delays in governance commitments, fiscal performance or the funding package will move the timeline outward.

Boards should therefore avoid building investment cases on immediate restoration of concessional finance. Banks should maintain separate scenarios covering accelerated clearance, a delayed official package and an asset backed transaction.

Infrastructure companies should prepare projects that can move into multilateral financing once access returns. Mining companies should assess the exposure created by any proposal to use sector export earnings as sovereign security. Pension funds should track the domestic debt reprofiling because delayed external resolution could increase Treasury dependence on local institutions.

Treasury Must Stop Creating New Arrears Before It Clears the Old Stock

The immediate policy priority is a unified arrears strategy covering foreign and domestic creditors.

Ministry of Finance should publish the proposed US$2.7 billion financing structure before final commitment. The disclosure should show pricing, maturity, repayment source, security, expected refinancing and the net concessional funding unlocked after clearance.

Public Debt Management Office should publish a quarterly dashboard showing international financial institution arrears, bilateral arrears, domestic expenditure arrears, mining company obligations, government security arrears and new unpaid commitments.

The Office of the Auditor General should complete the review of domestic expenditure arrears and classify each amount by project, supplier, responsible ministry and verification status. Treasury should then issue a payment calendar for valid claims.

Cabinet and Parliament should set a ceiling on new expenditure commitments entered without available financing. Public projects should carry funded cash flow schedules before contractors are instructed to proceed.

CEOs and boards of contractors, banks and mining companies should place limits on additional unsecured exposure to Government. New work should carry payment milestones, interest on delayed settlement or enforceable setoff mechanisms. Companies that continue funding the state through unpaid invoices risk converting revenue growth into sovereign receivables with uncertain maturities.

The competitive advantage will accrue to companies that quantify their total public sector exposure before the clearance programme changes the allocation of Treasury cash. Contractors with validated claims, complete documentation and structured bank facilities will enter the payment queue from a stronger position. Banks that identify borrower exposure early can reprice facilities and prevent arrears from spreading into wider corporate defaults.

Zimbabwe’s debt resolution has entered a double arrears test. Treasury needs about US$2.7 billion to reopen the World Bank, AfDB and European Investment Bank. Domestic arrears already stand near US$2.1 billion. The state also faces US dollar Treasury bond maturities, mining reimbursement obligations and local refinancing pressure.

The external process will become credible when it changes payment behaviour across the whole public balance sheet. Clearing arrears in Washington, Abidjan and Luxembourg will reopen important financing channels. The gain will remain incomplete where contractors in Harare, mining companies on the Great Dyke and holders of domestic securities continue carrying unpaid state obligations.

The decisive metric is the direction of total arrears. A decline in international financial institution arrears accompanied by growth in obligations to domestic suppliers would move the liability across creditors and preserve the mechanism that created the debt problem.

Zimbabwe’s return to international finance will become durable when Government can meet external debt service, domestic invoices and public investment commitments from a fiscal system that no longer depends on creditors carrying state obligations indefinitely.

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