Key Takeaways
- Zimbabwe’s government stepped in to absorb NMBZ’s blocked foreign liabilities
- The debt dated back to years of acute foreign exchange shortages
- Treasury Bills were issued as part of the settlement arrangement
Zimbabwe’s government has assumed responsibility for more than $10 million in legacy foreign liabilities owed by NMBZ Holdings, a major financial service in the country, to two international development finance institutions.
The Ministry of Finance, Economic Development and Investment Promotion approved the settlement and issued Treasury Bills under Section 52 of the Finance Act to cover the obligations.
The announcement was made in a company statement published on Thursday in Harare. Blocked funds have been one of the most persistent financial burdens carried by Zimbabwean banks and businesses since the country’s foreign exchange crisis years.
For a mid-sized bank like NMBZ, clearing liabilities of this size frees up balance sheet space and removes a long-standing drag on its financial position.
The arrangement also covered a separate $1.4 million subordinated loan from another development finance institution dating back to 2013, for which the Finance Ministry issued Treasury Bills in favour of the creditor.
“The government of Zimbabwe assumed the obligation to settle these blocked funds in terms of Section 52 of the Finance Act,” the company said.
Why the settlement matters
Blocked funds have been a defining problem for Zimbabwe’s financial sector for over a decade.
NMBZ’s banking subsidiary owed $13.4 million to various line of credit providers as at December 31, 2021, all of which had been registered as blocked funds with the Reserve Bank of Zimbabwe in line with regulatory directives.
The creditors included Dutch development finance institution FMO, Swedfund of Sweden, and the African Export-Import Bank. Foreign creditors holding unresolved claims have been reluctant to extend new lines of credit to Zimbabwean institutions, limiting the ability of local banks to fund trade and investment.
Resolving these obligations, even gradually, signals to external lenders that Zimbabwe is working through its legacy liabilities in a structured way.
How blocked funds accumulated
Zimbabwe’s blocked funds crisis grew out of a prolonged period of acute foreign exchange shortages that began in the late 2000s and deepened through the 2010s.
Companies and banks that had borrowed in foreign currency from international lenders found themselves unable to repatriate funds or service debts as the country’s forex reserves dried up. Maturities on legacy instruments issued to cover blocked funds and Reserve Bank of Zimbabwe liabilities exceed $400 million per year between 2026 and 2034, a concentration that presents significant refinancing pressure for the government.
The government responded by creating a legal framework under the Finance Act that allowed it to absorb qualifying blocked fund obligations and replace them with government-backed instruments.
Authorities have opted for a proactive and structured approach to managing these maturities rather than allowing risks to accumulate, according to government statements on the restructuring framework
What comes Next
Meanwhile, NMBZ did not provide a full breakdown of the two development finance institutions involved in the latest settlement. The Zimbabwe Independent, a local news outlet, said the arrangement brings the bank meaningfully closer to a clean balance sheet on its legacy foreign obligations.
Zimbabwe’s broader debt restructuring process remains ongoing, with the country still in talks with bilateral creditors including Japan, to which it owes $381 million.
Earlier, Reuters has reported that resolving Zimbabwe’s arrears with multilateral and bilateral lenders remains a prerequisite for the country regaining full access to international capital markets.
