Harare, – Zimbabwe is showing early signs of economic recovery and growing macroeconomic stability, driven by recent policy reforms and improved fiscal discipline, the International Monetary Fund (IMF) has said in its latest Article IV Consultation report.
The IMF mission, led by Mr. Wojciech Maliszewski, visited Harare from 4 to 18 June 2025 to assess the country’s economic health. The report credits the Zimbabwean authorities with implementing critical policy adjustments following years of hyperinflation, currency instability, and unsustainable fiscal practices.
Currency Reforms and Inflation Control
A key highlight of the report is the introduction of the Zimbabwe Gold (ZiG) currency, accompanied by a tightened monetary stance and the cessation of quasi-fiscal operations by the Reserve Bank of Zimbabwe (RBZ).
These measures have significantly contributed to taming inflation and stabilising the exchange rate. Between February and May 2025, monthly inflation averaged just 0.5%, while the gap between official and parallel market exchange rates narrowed to 20%.
The IMF also welcomed the repeal of Statutory Instrument 81A, which had compelled businesses to use the official exchange rate in pricing. The removal of this requirement has reduced informal activity and limited dollarisation in the economy.
Growth Outlook and Sectoral Recovery
Zimbabwe’s economy is expected to grow by 6% in 2025, recovering from a contraction in 2024 caused by drought and falling global commodity prices.
Improved weather patterns and strong global gold prices have boosted agriculture and mining, improving the country’s current account and stimulating domestic activity.
Revenue Gains and Fiscal Pressures
Government revenues have increased to 18% of GDP, supported by new taxes, reduced VAT exemptions, and anti-smuggling efforts. Despite these gains, the IMF flagged ongoing fiscal challenges, including rising public sector wages, infrastructure spending ahead of the SADC summit, debt servicing related to the RBZ’s past activities, and liabilities under the Mutapa Investment Fund.
The fiscal deficit has widened, financed through Treasury bills and RBZ overdrafts. This has increased domestic liquidity, led to the ZiG’s sharp depreciation in September 2024, and sparked a temporary inflation spike and arrears accumulation.
Key IMF Recommendations
The IMF outlined several structural reforms critical for sustaining stability and growth:
Engagement and Financial Support
Despite acknowledging Zimbabwe’s progress, the IMF reiterated that it cannot extend financial support due to the country’s unsustainable external debt and arrears.
Financial assistance would only be possible following:
Nonetheless, the IMF pledged to continue supporting Zimbabwe through technical assistance and policy guidance in areas such as public financial management, debt sustainability, and macroeconomic statistics.
Source: Thezimbabwemail
