Libya Seeks to Recover $100 Million in Debt from Zimbabwe

Libya launched legal action to recover more than $100 million in unpaid debt from Zimbabwe, adding to the southern African nation’s growing list of creditor disputes as it struggles under a debt burden exceeding $21 billion.

The lawsuit was filed in November before the UK High Court’s Commercial Division by the Libyan Foreign Bank, an arm of Libya’s central bank, against Zimbabwe’s finance minister and the country’s state-owned oil infrastructure company.

The claim relates to loans extended under a $90 million credit facility agreed in 2001, which court documents say Zimbabwe failed to fully repay. Judge Richard Jacobs has given the Zimbabwean defendants until the end of this month to submit their defense.

Zimbabwe has been largely excluded from international capital markets for more than two decades due to persistent arrears owed to multilateral lenders, including the World Bank, as well as outstanding obligations to private creditors.

According to Bloomberg, the country has accumulated unpaid debts of at least $21 billion over the past 26 years, severely limiting its access to external financing.

In 2022, Zimbabwe entered talks to settle unpaid fuel import bills owed to Trafigura Group, proposing payment through gold and nickel worth $226 million, highlighting the strain on its foreign currency reserves.

The government has also backtracked on a $3.5 billion compensation agreement reached in 2022 to compensate nearly 4,000 white farmers whose land was forcibly seized in the early 2000s under policies introduced by late President Robert Mugabe.

The Libyan Foreign Bank said that Zimbabwe’s National Oil Infrastructure Company of Zimbabwe (NOICZIM) agreed in 2001 to the credit facility and drew down nearly half the amount over the following two years to finance fuel imports from Dutch firm Oilinvest.

Court filings show that the Zimbabwean company made just $5.5 million in repayments, spread across four installments between 2013 and 2023. Including interest, the outstanding balance now exceeds $100 million, the bank said.

Neither the Libyan Foreign Bank nor Zimbabwe’s oil company and finance ministry responded to requests for comment.

At the time the agreement was signed, Zimbabwe’s then finance minister Simbarashe Makoni agreed that the Ministry of Finance would guarantee the debt. The current finance minister is Mthuli Ncube.

According to the Libyan Foreign Bank, Zimbabwean government officials have repeatedly acknowledged the outstanding debt since 2005 in formal correspondence with the lender.

Judge Jacobs’ order noted that Ncube had accepted the case being heard in UK courts, after initially indicating he might challenge the court’s jurisdiction.