Zimbabwe Central Bank to Settle $1.2 Billion of Legacy Debt

The Reserve Bank of Zimbabwe approved the payment of $1.2 billion in legacy debt, but rejected claims for a further $861 million as the nation battles the twin effects of currency depreciation and a crippling shortage of foreign currency.

The Reserve Bank of Zimbabwe tower in Harare.
The Reserve Bank of Zimbabwe tower in Harare. Photographer: Waldo Swiegers/Bloomberg

Settlement of the verified foreign debt will be amortized over an extended period, “with forex-denominated savings bonds” being issued to some of the creditors, the central bank said in its monetary policy statement Monday.

The southern African nation owes foreign entities, including airlines, and fuel and grain suppliers, about $2.6 billion in legacy debt since it dropped the 1:1 peg of its local dollar to the U.S. unit a year ago, but hasn’t been able to meet payment obligations due to the severe shortage of foreign currency.

Another 350 transactions valued at $457 million will be finalized by Feb. 29, the bank said.

Senior government officials have previously said they would ask creditors to take a cut on some of the debt, to save on the much-needed foreign currency.

Foreign debt of $361 million owed by the bank was not included in the amounts, Governor John Mangudya said.

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