Debt Rescheduling

Debt rescheduling refers to restructuring the terms of an existing loan. The debt can be rescheduled as follows:

  • Reduce payment amounts by extending the payment period and increasing the number of payments.
  • Pause payments or reduce payment amounts during a given period and then increase the amount of the monthly instalments.

What is debt rescheduling for?

When a borrower faces a temporary economic issue (liquidity issue, seasonal drop in sales, etc.) or another unforeseen event (accident, illness of the manager, natural disaster, etc.), they may be unable to fulfil payments or repay the instalments in time. For lenders, a debt rescheduling represents a better option than default since you will keep on receiving monthly repayments. For borrowers, it is an alternative to late fees and reputational harm.[1]

Zimbabwe's Debt Rescheduling

In 2015 the Ministry of Finance and Economic Development signed a debt rescheduling agreement with the International Fund for Agriculture Development (Ifad) that was to see Zimbabwe pay its US$22,6 million debt over five years. Speaking at a signing ceremony in Harare, the then Finance and Economic Development minister Patrick Chinamasa said the debt had affected Ifad’s co-operation, as the governing laws of the fund did not allow full engagement and allocation of new resources when a member is in arrears. Chinamasa said government has made a down payment of $2,3 million, 10% of the total debt stock, to clear the arrears meant to unlock new concessional financing, as part of the re-engagement process.[2]

In 2016 the government was to finalise its agreement to repay some US$1.8 billion of arrears to multilateral financial institutions triggering its re-entry into the international financial system after almost two decades in the cold. The boards of the International Monetary Fund, the World Bank and the African Development Bank were to meet in September 2016 to confirm the settlement of all outstanding payments to them and discuss plans for fresh loans to Zimbabwe.[3]

In a letter to the heads of IMF, World Bank, African Development Bank, Paris Club and European Investment Bank on 2 April 2020, Zimbabwe’s Finance Minister Mthuli Ncube sought debt relief and an arrears clearance program.[4] Zimbabwe pleaded with international institutions to help it clear billions of dollars in debt arrears so the country can avoid economic collapse and unlock funds to fight the coronavirus pandemic. The country is about $2bn behind on payments to official lenders including the World Bank and AfDB, although it has paid off the IMF.

Mthuli Ncube asked for “urgent and high-level dialogue” on a bridge loan to clear the multilateral arrears, as well as the rescheduling of other overdue debts owed to governments. In return for help, Zimbabwe would pledge to halt central bank money printing and “eliminate discretion in the allocation of foreign exchange”, he said.[5]

In 2010, China rescheduled Ziscosteel's US$54,684 million debt to 2013, as Beijing and Harare signed agreements that were to see the former investing in improving Harare's water supply among other projects. Government paid US$5 million as a sign of its commitment to paying the Ziscosteel debt that dated back to 2007. The debt rescheduling placed Zimbabwe in a better position to bargain for further financing of 10 projects of national priority.[6]


  1. Camille David, [1], October, Accessed: 16 October, 2020
  2. Tarisai Mandizha, [2], Newsday, Published: 8 December, 2015, Accessed: 16 August, 2020
  3. [3], The Zimbabwean, Published: 21 June, 2016, Accessed: 16 August, 2020
  4. Antony Sguazzin and Godfrey Marawanyika, [4], Bloomberg, Published: 3 May, 2020, Accessed: 16 August, 2020
  5. Joseph Cotterill and David Pilling, [5], Financial Times, Published: 3 May, 2020, Accessed: 16 August, 2020
  6. Paidamoyo Chipunza, [6], allAfrica, Published: 29 January, 2010, Accessed: 16 August, 2020