Interest-free loans made to Zimbabwe are canceled by China

Even as activists warned of a perpetual debt trap, China has written off an undefined portion of Zimbabwe’s interest-free loans and promised to assist the Southern African nation in resolving its financial crisis.

Zimbabwe’s publicly guaranteed debt was $17.7 billion as of September 2023, with $12.7 billion coming from outside and $5 billion coming from within.

Since China has not been able to receive loans from multilateral creditors like the World Bank and the International Monetary Fund (IMF) due to repayment defaults since the year 2000, the majority of the foreign debt was acquired from China.

Ever since longtime leader Robert Mugabe was overthrown six years ago, Zimbabwe has had difficulty coming to a debt restructuring agreement with creditors.

Leading the debt restructuring talks are Dr. Akinwumi Adesina of the African Development Bank and former president of Mozambique Joachim Chissano. The dialogue took a hit last month when the United States withdrew its backing, citing Harare’s resistance to reform.

China claims to be prepared to assist Zimbabwe in escaping its debt maze and is currently the country’s biggest non-Paris Club creditor.

Zimbabwe’s debt to China is estimated by some to be $3 billion.

The resolution of Zimbabwe’s debt problems is very important to China, according to Zhou Ding, the country’s ambassador to Zimbabwe.

China would like to improve contact in order to amicably consult and work out appropriate statements with the Zimbabwean authorities. China has taken proactive measures by canceling Zimbabwe’s interest-free loans, which were set to maturity by the end of 2015.

Although Mr. Zhou did not reveal the total amount of debts forgiven, analysts speculated that it might not be a significant sum given Zimbabwe’s rising debt to China for infrastructure projects following the end of Mr. Mugabe’s almost four-decade dictatorship.