Zimbabwe - Joint World Bank-IMF Debt Sustainability Analysis

Overview & Synopsis

Zimbabwe’s debt remains unsustainable and assessed to be in “external and overall debt distress”. Significant arrears are owed to multilateral and official bilateral creditors, which stands as an obstacle to its path towards official concessional financing and market access. Most indicators regarding the external and total public debt continue to breach the indicative thresholds in both the baseline and shock scenarios throughout the medium term. Restoring debt sustainability requires (i) fiscal discipline that restrains further accumulation of debt; (ii) transparently embarking on a credible plan to clear arrears to multilateral creditors; and (iii) reaching an agreement with bilateral official and other creditors on a comprehensive treatment of Zimbabwe’s external debt. Sustained implementation of sound macroeconomic policies, growth-friendly monetary and fiscal policy reforms, along with governance and structural reforms that focus on improving Zimbabwe’s competitiveness, will help restore macroeconomic stability, set the stage for sustainable long-term growth, and build a policy track record required for debt relief.