Zimbabwe’s domestic debt portfolio review

Government’s domestic debt tumbled from a high of US$9,5 billion in 2018, to US$530 million in 2019 due to the revaluation of domestic debt brought about by the introduction of the local currency, latest statistics from Treasury have shown.

The amount of total domestic debt, in real terms, decreased from US$9,5 billion in 2018, to US$530 million in 2019 due to the revaluation of domestic debt brought about by the introduction of the local currency.

As at end December 2019, domestic debt including the debt housed under the Zimbabwe Asset Management Company (ZAMCO) (ZAMCO debt $1.1 billion) stood at $8.88 billion (5 percent of GDP).

In line with Government’s thrust to achieve debt sustainability and to the development of the domestic debt market, Government has been prioritising issuing long term debt instruments.

In this regard, as at end December 2019, long term debt instruments accounted for 85 percent of the total outstanding domestic debt, while short term debt instruments accounted for 15 percent.

The domestic debt market was the major source of financing the budget deficit in 2019, as access to external sources remains constrained due to the accumulation of external debt arrears to creditors.

Of the debt, non-banking sector held 67 percent of the total outstanding domestic debt as at 31 December 2019, while the banking sector held 33 percent.

The non-banking sector holders of the domestic debt instruments includes insurance companies, pension funds and corporates.

In terms of external debt, total external Public and Publicly Guaranteed (PPG) debt amounted to US$8.09 billion 84 percent of GDP as at end December 2019.

The external debt arrears accounts for 74 percent (US$5.97 billion) of the total external public and publicly guaranteed debt.

This represents a 2 percent increase from the 2018 total external public and publicly guaranteed debt of US$7.94 billion excluding
the RBZ and private sector external debt.

The increase in the total PPG debt is as a result of the continued accumulation of principal and interest arrears, as well as the disbursements from the active portfolio recorded in the year under review.

See attached for more information on the country’s debt position. Bulletin Dec2019 25November 2020