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Debt crisis will delay Zimbabwe economic recovery

Tuesday, June 30, 2015

Subject

Outlook for Zimbabwe's sovereign debt.

Significance

Secretary to the Treasury Willard Manungo earlier this month revealed that the government owes its diplomats 10 million dollars in salary arrears. It is the latest development in Zimbabwe's fiscal crunch, worsened by President Robert Mugabe's government's limited access to debt financing. This is forcing it to pursue complex, simultaneous negotiations with multiple creditors.

Impacts

  • Limited financing will hurt government plans to import 700,000 tonnes of maize necessary to address drought-induced shortfalls.
  • South Africa's restrictive visa regime and clampdowns on illegal immigrants could begin to hurt remittance flows to Zimbabwe.
  • Former Vice-President Joice Mujuru is unlikely to announce a new party in the short term, but may do so before polls in 2018.

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