Harare, Zimbabwe: Following the request for a Staff-Monitored Program (SMP) by the authorities in 2023, an International Monetary Fund (IMF) staff team led by Mr. Wojciech Maliszewski conducted a mission to Harare from January 30 to February 13, 2024, to advance discussions on the SMP.
At the conclusion of the IMF mission, Mr. Maliszewski issued the following statement:
"Zimbabwe's economic activity has started recovering after the El Niño-induced drought. Growth slowed from 5.3 percent to an estimated 2 percent in 2024, as the drought lowered agricultural output by 15 percent. This was compounded by reduced electricity production and declining prices for key mineral exports (platinum and lithium). That said, strong remittances continued supporting activity in domestic trade, services, and construction, and improved the current account surplus to an estimated US$500 million (1.4 percent of GDP) in 2024. The ZiG willing-buyer willing-seller (WBWS) exchange rate was stable from the ZiG's introduction in April 2024—with the ZiG month-on-month inflation averaging 2.3 percent—until September, when the currency weakened. Relative stability returned with the tightening of monetary policy since September, and the WBWS and parallel market exchange rates have stabilized, and the gap between these rates has narrowed. Meanwhile, fiscal pressures intensified—owing, in large part, to the transfer of the RBZ's quasi-fiscal operations to the Treasury. Strong revenue collection helped limit the 2024 budget deficit to an estimated 1 percent of GDP, but fiscal pressures resulted in an accumulation of domestic expenditure arrears, leading to the government implementing emergency spending cuts. Going forward, growth in 2025 is projected to increase to 6 percent, with the recovery in agriculture output due to better climate conditions and the projected improvement in the terms-of-trade.
"Against this background, the Zimbabwe authorities had requested an SMP to support their efforts to stabilize the economy and re-engage with the international community on the arrears clearance and debt resolution process. The main objective of the SMP would be to durably anchor macroeconomic stability, building on policy recommendations from the 2024 Article IV consultation.
"Building on progress achieved during the mission on the ongoing SMP discussions, Fund staff will continue working closely with the authorities on defining the key parameters and modalities of the program. Discussions include (1) adjusting the fiscal position to avoid a recourse to monetary financing and new arrears and building foundations for a durable fiscal consolidation; (2) fiscal risks residing off-budget (including from the operations of the Mutapa Investment Fund); (3) the effectiveness of the monetary policy framework for the ZiG; and (4) reforms to strengthen economic governance.
"International reengagement remains critical for debt resolution and arrears clearance, which would open the door for access to external financing. The authorities' reengagement efforts, through the Structured Dialogue Platform (SDP), are key for attaining debt sustainability and gaining access to concessional financial support. In this context, the SMP will help in enhancing policy credibility and advancing the reform agenda embedded in the SDP.
"The IMF continues to provide policy advice and extensive technical assistance in the areas of revenue mobilization, expenditure control, financial supervision, debt management, economic governance, as well as macroeconomic statistics. However, the IMF is currently precluded from providing financial support to Zimbabwe due to its unsustainable debt situation—based on the IMF's Debt Sustainability Analysis ( DSA )—and official external arrears. An IMF financial arrangement would require a clear path to comprehensive restructuring of Zimbabwe's external debt, including the clearance of arrears and a reform plan that is consistent with durably restoring macroeconomic stability; enhancing inclusive growth; lowering poverty; and strengthening economic governance.
"The IMF mission held meetings with the Minister of Finance, Economic Development and Investment Promotion Hon. Professor Mthuli Ncube, his Permanent Secretary Mr. George Guvamatanga; the Reserve Bank of Zimbabwe Governor Dr. John Mushayavanhu; the Chief Secretary to the President and Cabinet Dr. Martin Rushwaya, other senior government and RBZ officials, honorable members of Parliament, representatives of the private sector, civil society, and Zimbabwe's development partners.
"The IMF staff wishes to express its gratitude to the Zimbabwean authorities and stakeholders for the constructive and open discussions and support during the mission."
