DEBT DYNAMICS IN ZIMBABWE: REFORMS, TRENDS AND CHALLENGES

The decades of economic crisis and political uncertainties in Zimbabwe since independence in 1980 have culminated in exponential increases in the central government's indebtedness. This paper, therefore, seeks to examine the evolution of government debt, both domestic and foreign, in Zimbabwe from 1980 to 2015. At the centre of the discussions are the public-debt structural reforms and frameworks, debt trends and the associated debt-management challenges over the review period. The paper identified four distinctive phases of public-debt evolution in Zimbabwe between 1980 and 2015: (1) 1980 to 1989, in which government debt was still small, but increasing gradually; (2) 1990 to 1997, in which public sector indebtedness was increasing exponentially - mostly due to substantial economic structural adjustment reforms, maturity of previous debts and severe economic crises; (3) 1998 to 2008, in which economic recession and subsequent revenue constraints led to the massive accumulation of public debt arrears; and (4) 2009 to 2015, in which the country experienced an economic rebound leading to some paltry payments on foreign public debt arrears. Among the recommended government debt management principles in Zimbabwe is the need to devise market-friendly trade and investment policies that would enable the government to expand its revenue base, thus effectively reduce the state's reliance on debt financing and also avoid the future accumulation of any arrears.