The IMF staff conducted a mission to Zimbabwe to discuss the Staff-Monitored Program (SMP) aimed at economic stabilization and debt resolution. Despite challenges, economic recovery is anticipated, with a projected growth of 6% in 2025. The SMP focuses on fiscal adjustments, enhancing governance, and increasing international engagement to improve Zimbabwe’s financial standing.
In 2023, Zimbabwe’s authorities requested a Staff-Monitored Program (SMP) from the International Monetary Fund (IMF). An IMF team led by Mr. Wojciech Maliszewski visited Harare from January 30 to February 13, 2025, to discuss the SMP, which aims to stabilize the economy and facilitate international engagement for debt resolution and arrears clearance.
Zimbabwe’s economic recovery from an El Niño-induced drought has been gradual. Economic growth declined from 5.3% to 2% in 2024, primarily due to a 15% drop in agricultural output, compounded by reduced electricity production and falling mineral export prices. Nevertheless, robust remittances sustained domestic trade, services, and construction, improving the current account surplus to an estimated US$500 million (1.4% of GDP).
Following the introduction of the ZiG exchange rate in April 2024, stability was observed until September when the currency weakened. However, tightening monetary policy post-September has restored relative stability, leading to a narrowing gap between WBWS and parallel market rates. Intense fiscal pressures emerged due to the transfer of quasi-fiscal operations to the Treasury, leading to emergency spending cuts despite strong revenue collection limiting the 2024 budget deficit to 1% of GDP.
Growth projections for 2025 are optimistic at 6%, driven by improved agricultural output and favorable terms of trade. The IMF aims to set up the SMP to establish macroeconomic stability, building on 2024’s Article IV consultation policy recommendations. Key discussion areas include adjusting fiscal positions, addressing off-budget fiscal risks, enhancing the monetary policy framework, and reforming economic governance.
International engagement is vital to achieving debt sustainability and clearing arrears while accessing external financing. The SMP will bolster policy credibility and support reform agendas through the Structured Dialogue Platform (SDP). While the IMF is unable to provide financial support due to Zimbabwe’s unsustainable debt, technical assistance continues in areas like revenue mobilization, expenditure control, and economic governance.
Meetings during the mission included high-ranking officials such as the Minister of Finance, Hon. Professor Mthuli Ncube, and the Governor of the Reserve Bank of Zimbabwe, Dr. John Mushayavanhu. The IMF expresses appreciation for the constructive discussions held with Zimbabwean authorities and stakeholders throughout the mission.
The IMF’s recent mission to Zimbabwe focused on advancing the Staff-Monitored Program (SMP), which seeks to stabilize the country’s economy amid fiscal and external challenges. Zimbabwe’s economy is rebounding slowly after adverse weather impacts, with expected growth in 2025. The SMP aims to build macroeconomic stability, facilitate effective policy reforms, and re-establish connections with international financial institutions to aid debt resolution.
Original Source: www.zawya.com
