Zimbabwe

Over the last quarter century, Zimbabwe has failed to pay $21 billion in debt. Now, as the country struggles with the impact of a once-in-a-generation drought, ordinary Zimbabweans are paying the price, Bloomberg News reported. A prolonged hot and dry spell caused by the El Niño weather phenomenon has ravaged southern Africa, withering crops and leaving 26 million people across seven nations hungry, according to the United Nations’ World Food Programme. Zimbabwe has been hardest hit, with the corn crop falling by more than two-thirds from previous years.

Zimbabwe’s Finance Minister Mthuli Ncube said the southern African nation needs to regain access to credit lines before it can adopt the ZiG as its sole currency, Bloomberg News reported. “We need a few things in place” before the nation can have a mono currency, including making progress on restructuring $21 billion in debt, Ncube said. The nation has been locked out of capital markets since 1999 after defaulting on its debt.

Zimbabwe has started paying reparations to nations and farmers whose land was seized in the 2000s, a step toward the restructuring of its $21 billion debt pile, Bloomberg News reported. Initial disbursements were made to Denmark, Germany, Netherlands, Switzerland and the former Yugoslavia last month for 94 farms that were taken, Finance Minister Mthuli Ncube said. Fifty-six farmers from those countries, which had bilateral investment-protection agreements with Zimbabwe, were also paid. “Payments are being made to the claimant’s bank accounts of choice,” Ncube said in a statement on Friday.

Zimbabwe must be ready for the bitter medicine of higher taxes and spending cuts if it takes up a staff-monitored programme (SMP) with the IMF, the World Bank warns in a new report, according to NewzWire.live. Under an SMP, the IMF and Zimbabwe would agree on a set of economic programmes that the Fund would monitor. Zimbabwe and the IMF plan to open talks for the programme this quarter, as part of a broader bid by the government to please creditors and win a deal to restructure its debt arrears. This is a good idea, the World Bank says in the Zimbabwe Economic Update, launched Friday.

Zimbabwe sought to assure citizens that its gold-backed currency would not suffer another steep devaluation and steps were being taken to assure its defence, Bloomberg News reported. “It was a once-off,” Reserve Bank of Zimbabwe Governor John Mushayavanhu told the state-owned Zimbabwe Broadcasting Corporation in an interview posted on X. “We expect things to stabilize going forward and should start to see prices fall.” The ZiG — short for Zimbabwe Gold – was devalued by 43% on Sept. 27 to 24.4 per dollar after a wide gap emerged between the official and unofficial exchange rate.

Zimbabwe’s government has hired financial and legal advisers to help it navigate potential talks with international creditors over the $21 billion it owes, Bloomberg News reported. Paris-based boutique firm GSA & Co. SAS, founded by a former Rothschild & Co. banker, and law firm Kepler Karst, which specializes in debt restructuring and insolvency, signed engagement letters to provide Zimbabwe with advice on debt management. The southern African country has been locked out of international debt markets since 1999 after a default, and its interest payments have ballooned.

Zimbabwe’s creditors may be willing to consider a debt-for-climate swap with the nation as part of a restructure of its $21 billion in arrears, Bloomberg News reported. Interactions with the nation’s development partners indicate it is “an option that they are willing to consider,” Raul Fernandez, a United Nations Development Program project manager for climate development frameworks, said at a summit Monday hosted by the country’s Treasury in the resort city of Victoria Falls. “They need to see some action from the government, this commitment to structural reforms,” he said.

Zimbabwe’s banks support adopting the ZiG as the nation’s sole currency before the current target date of 2030, provided the economic stability which the bullion-backed unit has delivered is maintained, Bloomberg News reported. Bankers Association of Zimbabwe President Lawrence Nyazema said the availability of the ZiG — which stands for Zimbabwe Gold — will improve as the nation boosts its foreign currency and bullion holdings. “We committed to coming up with a roadmap which would lead us to having a mono-currency by 2030,” Nyazema said in an interview.

Zimbabwe will seek full convertibility of its new currency, the ZiG, as a way to further support the unit and protect it from collapse, according to Mthuli Ncube, the Finance Minister, Bloomberg News reported. The ZiG’s predecessor, the Zimbabwe dollar, couldn’t be exchanged for other currencies, or traded outside the country. The international community has “reacted positively” to the new unit since its launch last month, and asked Zimbabwean authorities to ensure it’s kept stable, according to Ncube.

Zimbabwe, in its latest bid to end the serial slide of the local dollar, has replaced it with a new unit called the ZiG backed by a basket of foreign currency and gold, Bloomberg News reported. Central Bank Governor John Mushayavanhu told a press conference in Harare, the capital, on Friday, that the ZiG — short for Zimbabwe Gold — would be launched on April 8 at an introductory level of 13.56 per dollar and a new interest rate set at 20%. That compares with the 130% on the old unit, which was the highest central bank rate in the world.