Zim owes US$1.7 billion to pensioners, schools, contractors as Govt ministries over contract services

Zimbabwe’s government ministries continue transacting outside the official Public Finance Management System (PFMS), committing to contracts far beyond approved budgets and operating under weak monitoring systems. This has allowed Zimbabwe’s expenditure to spiral out of control, resulting in a massive accumulation of unpaid bills. The misalignment between budget allocations and actual cash releases has left the State owing ZIG45.6 billion (US$1.7 billion) to pensioners, service providers, schools, health programmes and contractors.

The arrears are crippling small businesses and destabilising essential social services, prompting the government to table a five-year Expenditure Arrears Clearance Strategy (2026–2030) aimed at liquidating the debt and preventing further fiscal slippage. The strategy, presented in Parliament by Finance Minister Professor Mthuli Ncube on November 27, 2025, outlines a phased, five-year plan to address a crisis born of weak fiscal controls and “over-contracting.” At the end of 2024, the government owed US$1.69 billion, with 98 percent denominated in US dollars. A significant portion of the arrears is owed to critical social and employee welfare programmes, including:US$98 million to the Basic Education Assistance Module (BEAM)US$77.05 million in Results-Based Financing claims for health services US$69.58 million to the Pension FundUS$23.48 million to the National Social Security Authority (NSSA)US$28.50 million for Medical Aid (PSMAS)US$0.39 million to the Government Employee Mutual Savings FundUS$50 million to the Zimbabwe School Examinations Council (ZIMSEC).

The strategy bluntly diagnoses the causes of this accumulation, stating “expenditure arrears arise when the Government fails to meet its payment obligations for wages and salaries, recurrent goods and services, capital goods and services, transfers and subsidies, within the timeframes contractually or legally required.” The strategy identifies the root causes as ministries transacting outside the official public finance management system, weak monitoring, “over contracting, where Ministries, Departments, and Agencies (MDAs) are committing above the budgeted resources,” and a “misalignment of budget and cash releases.” “The accumulation of expenditure arrears to the providers of goods and services has emerged as a Public Financial Management (PFM) risk for the fiscus,” the strategy states. “This challenge undermines effective budget implementation and fiscal discipline, a problem faced by many governments globally.” To clear the debt, the government proposes a reverse auction mechanism. Verified arrears will be converted into five-year, non-tradable government securities, with creditors bidding to sell their debt back to the state at a discount.