Zimbabwe to Offload State-Owned Enterprises to Tackle Public Debt
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Zimbabwe is urgently seeking to identify and sell several State-owned Enterprises (SOEs) as part of efforts to reduce its mounting public debt, which has now surpassed US$21 billion.
This significant debt, which constitutes almost 90% of the nation’s GDP, poses a threat to economic progress and compromises fiscal stability.
Finance Minister Mthuli Ncube revealed that the government has begun the process of pinpointing assets for sale to address the debt. Speaking to Business Times at the launch of the National Venture Capital Company of Zimbabwe (NVCCZ) event last week, he said:
“We are looking to see which assets we should target. It’s a work in progress. When opportunities arise, we will swing on the right assets and we’ll be able to allow ourselves to dispose of them.”
Ncube highlighted the urgency of the situation by noting that Zimbabwe’s average growth rate of around 6% is far lower than the interest rate growth, which means the debt will continue to increase. “That’s why we have to restructure our debt to ensure that the debt does not accumulate,” he added.
Ncube also called on various stakeholders, including the private sector, civil society, and development partners, to consider the debt crisis as a national issue rather than just a government problem.
Last year, the government initiated high-level dialogue platforms led by AfDB President Akinwumi Adesina and former Mozambican President Joaquim Chissano to tackle the issue. However, delays in implementing key governance reforms necessary for clearing arrears and resolving the debt have hindered progress.
Economist Gift Mugano warned that the country’s escalating debt, coupled with its limited repayment capacity, could result in a full-blown fiscal crisis if not promptly addressed. He stated:
“The government’s slow pace in addressing governance reforms risks further isolating Zimbabwe from international financial support. The rising debt levels demand immediate restructuring or forgiveness to avoid economic catastrophe.”
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