## 1zweea2026002

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### Executive summary — context and recent performance
- SMP: 10-month Staff‑Monitored Program approved March 27; priorities include prudent budget execution, improved cash and expenditure controls, improved social protection delivery, sustained monetary discipline, and governance reforms to enhance transparency and manage fiscal risks.
- External debt status: Zimbabwe’s external public debt assessed as unsustainable and in distress.
- External shocks: war in the Middle East raised fuel, fertilizer, and food prices and increased trade disruptions; international gold prices remain high supporting activity, fiscal revenues, and FX inflows.
- Program implementation through end‑March:
  - All five quantitative targets met.
  - All but one indicative target met; floor on protected social and priority spending missed.
  - All structural benchmarks scheduled for end‑March and end‑June met.
- Growth and GDP:
  - Real GDP growth: 2025: 8.3 percent; 2024: 1.7 percent. Staff had projected 7.5 percent for 2025.
  - Nominal GDP: increased by 88 percent (72 percent projected earlier); deviation driven by statistical rebasing upon completion of the economic census.
- Main growth drivers: mining activity amid record‑high gold prices; rebound in agricultural production after the 2024 drought.
- Mission dates and participants: discussions in Harare during June 9–18, 2026; IMF staff team led by Wojciech Stanislaw Maliszewski with AFR, STA, MCM, SPR specialists and local staff.

### Outlook and key risks
- Near‑term and medium‑term projections:
  - Growth: 5 percent in 2026; 4.2 percent over the medium term.
  - Inflation: expected to remain in single digits under tight policies; annual CPI inflation expected to reach 8 percent by end‑2026.
  - Current account: surplus projected at 3.2 percent of GDP in 2026; 2025 current account surplus about US$2.1 billion or 3.6 percent of GDP.
- Main downside risks:
  - A major El Niño event.
  - Renewed war in the Middle East with trade disruptions and energy and gold price volatility.
  - Policy slippages.
- Policy implication: need to rebuild buffers and maintain disciplined implementation.

### Fiscal performance, composition, and management
- Q1 2026 outturns:
  - Overall cash balance: US$304 million (0.5 percent of GDP).
  - Primary cash balance: US$371 million (0.6 percent of GDP).
  - Revenues exceeded target by 0.8 percent of GDP; Q1 revenue overperformance about US$560 million (above the US$400 million gap).
  - Spending was 0.4 percent of GDP above the program; overruns mainly in transfers and subsidies (cap exceeded by about US$275 million).
  - Gold incentives for artisanal miners: US$118 million in Q1 (US$141 million by end‑April), above program limit and the US$16 million annual budget.
  - Capital spending included a net repayment of unaudited arrears of US$95 million.
- Amortization and below‑the‑line outlays in Q1:
  - Amortization payments: US$398 million (0.6 percent of GDP) vs. program US$103 million (0.2 percent of GDP), including:
    - Early redemption and arrears payments of bonds: US$118 million.
    - Partial clearance of ‘open positions’ to mining houses: US$111 million.
    - Higher repayments to Afreximbank: US$36 million.
    - Unplanned payments for blocked funds: US$34 million.
- Fiscal projections and buffers:
  - 2026 projections: Revenue projected at US$10.3 billion (16.0 percent of GDP); spending projected to the original budget of US$9.5 billion; cash primary balance expected at about 1.7 percent of GDP.
  - Cash buffers build‑up: US$275 million if below‑the‑line largely reverts to original financing assumptions.
  - Clearance of past expenditure arrears estimated at 2.9 percent of GDP (US$1.7 billion) in 2025 planned through 2030.
- Program adjustments proposed:
  - Quarterly indicative target: floor on central government deposits.
  - Ceiling on gold‑incentive payments: indicative target US$300 million this year.
  - Rules‑based approach to early redemptions and other liability‑management operations.
  - Support for authorities’ request to modify the QT floor on the primary budget balance for end‑September 2026.

### Debt, arrears, and sustainability
- End‑2025 debt stock and composition:
  - Total public and publicly guaranteed debt: US$22.7 billion (38.0 percent of GDP).
  - External public debt: US$15.2 billion (25.5 percent of GDP); over 50 percent in arrears vis‑à‑vis external official creditors.
  - Selected components (US$ millions):
    - Total public debt: 12,908.0 (DOD) + 9,749.1 (Arrears and Penalties) = 22,657.1 (Total) (38.0 percent of GDP).
    - External debt: 7,592.7 (DOD) + 7,629.9 (Arrears and Penalties) = 15,222.6 (25.5 percent of GDP).
    - Multilateral creditors total: 140.2 (DOD) + 2,742.9 (Arrears and Penalties) = 2,883.1 (4.8 percent of GDP).
    - Bilateral creditors total: 1,596.0 (DOD) + 4,857.4 (Arrears and Penalties) = 6,453.4 (10.8 percent of GDP).
    - Commercial creditors total: 1,877.0 (DOD) + 29.6 (Arrears and Penalties) = 1,906.6 (3.2 percent of GDP).
    - Domestic debt total: 5,315.3 (DOD) + 2,119.3 (Arrears and Penalties) = 7,434.5 (12.5 percent of GDP).
    - Legacy debt: 3,979.6 (Total) (6.7 percent of GDP).
    - Former farm owners: 3,496.8 (Total) (5.9 percent of GDP).
- Arrears clearance needs and engagement:
  - Upfront clearance or agreed plan needed for about US$1.5 billion in arrears to the World Bank and US$1.1 billion to other IFIs.
  - Authorities engaged with Paris Club Secretariat for bilateral debt reconciliation and with MEFMI for domestic debt reconciliation.
  - Commitments to improve timeliness and comprehensiveness of debt disclosure and integrate DMFAS 7 with PFM and RBZ systems.
- Staff assessment: debt assessed as unsustainable and in distress (2025 Article IV DSA); restoring sustainability requires sustained reform implementation, a credible and fully financed plan to clear multilateral arrears, debt reconciliation, improved disclosure, and credible engagement strategy with official bilateral creditors.

### Monetary policy, liquidity management, and FX
- RBZ operations and instruments:
  - ZiG base money change through Q1: ZiG 425 million (actual) vs. ZiG 602 million (Q1 program target).
  - Zero‑interest NNCDs outstanding at ZiG 5,869 million at end‑May.
  - June introduction of ZiG‑Denominated Term Deposit Facility: auctioned ZiG 330 million at about 11 percent for 90 days and attracted ZiG 110 million at 8 percent for 30 days.
  - Policy rate lowered from 35 to 30 percent.
- Credit and deposits:
  - ZiG credit remained flat while USD lending expanded.
  - About 80 percent of banking sector deposits are US‑denominated.
- Exchange rate and FX market:
  - WBWS ZiG‑USD exchange rate stable; parallel rate gap narrowed from around 19 percent at beginning of year to around 16 percent in latest data.
  - RBZ selling to the WBWS market accounted for around 80 percent of transactions in the first five months of 2026.
  - RBZ was a net purchaser of FX in Q1 even as FX intervention picked up in Q2.
- Staff operational guidance:
  - RBZ should maintain a tight policy stance and be ready to tighten further if pressures intensify.
  - NNCDs should be replaced by market‑based indirect instruments as feasible; phase out policy rate as reliance on indirect instruments increases.
  - ZiG‑Denominated Term Deposit Facility welcomed as a starting point for indirect monetary operations.
  - Develop a comprehensive FX market liberalization strategy with sequencing and measures to promote ZiG demand (e.g., more taxes payable in local currency).

### Banking sector and financial stability
- Soundness indicators (through March/Dec‑2025 references):
  - Banking sector capital adequacy ratio: 23 percent in March (regulatory minimum 12 percent); declined from 28 percent in December 2025.
  - Overall non‑performing loan (NPL) ratio: 2.6 percent through March.
  - Share of watch‑listed loans: 9.8 percent.
  - Banking sector liquidity: liquid‑asset‑to‑total‑asset ratio at 33 percent; liquid‑asset‑to‑short‑term liabilities ratio at 46 percent.
  - Financial Soundness Indicators (Dec‑2025): Regulatory capital to risk‑weighted assets: 27.7; Capital to assets: 17.1; Nonperforming loans (past due > 90 days): 3.5; Past‑due loans to gross loans: 29.7; Return on assets: 5.9; Liquid assets/total assets: 35.2; Loans/deposits: 62.6.
- Policy and regulatory developments:
  - RBZ adopted Liquidity Coverage Ratio; plans to issue Net Stable Funding Ratio standard by end‑2026.
  - Basel III capital rules implementation underway; Asset Quality Reviews completed for four banks.
  - RBZ reviewed organizational structure and increasing bank resolution unit staffing.
  - IMF technical assistance requested on reviewing the net FX open position formula.

### Program performance, structural benchmarks, and capacity building
- Quantitative targets and indicative targets (selected):
  - Floor on the primary budget balance (US$ million): End‑March: 473; End‑June: 71; End‑Sept.: entries include Met1361362008992711,094 in table cells.
  - Ceiling on changes in credit to the nonfinancial public sector from the RBZ (US$ million): End‑March: 0‑40.
  - Floor on changes in net official international reserves (US$ million): End‑March: 74; actual +107 (net FX reserves adjusted for autonomous factors increased by US$107 million, above US$74 million program floor).
  - Ceiling on changes in ZiG monetary base of the RBZ (ZiG million): End‑March: 602; actual ZiG 425 (Met).
  - Indicative floor on central government total revenue collection (US$ million): End‑March: 1,975; End‑June: 2,533.
  - Indicative floor on protected social and priority spending (US$ million): End‑March: 190; actual 111 (Not met).
  - Indicative ceiling on central government subsidies related to gold incentives: 248 (previous) and 300 (proposed cap).
  - Indicative floor on central government deposits (US$ million): 306; proposed adjustor 275.
- Structural benchmarks — status (selected):
  - RBZ to publish reference exchange rate series: Met (March and June).
  - User manual for Zimbabwe Social Registry: Met (End‑June 2026).
  - Improve taxpayer register quality: Met (End‑March 2026).
  - TSA reform strategy and TSA actions: Met (End‑June 2026).
  - PFMS US dollar payment functionality and earmarking: In progress (End‑September 2026 timing).
  - Mutapa restrictions on new borrowing without Treasury approval: Met (March and June).
  - Publishing audited financials for Mutapa subsidiaries: timing End‑September 2026 (status not provided in excerpt).
  - Anti‑corruption strategy with policy matrix: timing End‑September 2026 (status not provided in excerpt).
- Capacity development:
  - FAD supporting medium‑term staffing plan and TSA reform strategy.
  - Two dedicated CD missions agreed to support domestic revenue mobilization; tax policy mission completed in April 2026.
  - World Bank support on PFM and social protection reforms.

### Social protection, arrears, and PFM reforms
- Social spending:
  - Budgeted social programs: US$755 million anchored on the Zimbabwe Social Registry.
  - Indicative target on protected social and priority spending missed at end‑March due to late disbursement start; payments made in March 2026 and spending to be reprofiled to meet annual target.
  - ZISO user manual adopted and published.
- Cash management, TSA, and PFMS:
  - Cash Management Committee (CMC) operationalized; CMC will limit total gold incentive spending through end‑2026 to US$300 million.
  - TSA reform strategy developed; PFMS USD payment functionality operationalized; Treasury circular requires all MDAs to process all USD payment requests through the PFMS.
  - PFMS to require Funds Reservations for all expenditures and to record earmarking for multi‑year capital projects.
- Expenditure arrears strategy:
  - Expenditure Arrears Clearance Strategy 2026–2030 tabled in Parliament on November 27, 2025.
  - Current expenditure arrears estimated at about US$1.7 billion at end‑2025, subject to Auditor‑General’s audits.
  - Government allocated US$318.6 million in the 2026 National Budget toward expenditure arrears clearance.
  - Clearance mechanisms include non‑tradable five‑year securities and voluntary reverse‑auction buybacks.
  - Auditor‑General’s Office TOR and workplan with completion dates: first reports by July 3, 2026; Input Support Scheme report by August 8, 2026; remaining categories by August 28, 2026.
  - Net reduction of domestic expenditure arrears of US$94.62 million in Q1 2026 for three initial focus ministries (SMP ceiling of zero net accumulation).

### FX market liberalization and operational sequencing
- Exchange rate policy and FX market measures:
  - Hybrid framework communicated (August 2025): price stability primary objective, nominal exchange rate intermediate target, reserve money operational target.
  - RBZ completed Pilot User Acceptance Testing for FX trading system with five banks; World Bank to validate and finalize system with deadlines through end‑September 2026 and operationalization in Q4 2026.
  - Strategy elements to promote ZiG demand: increase share of Treasury revenues and expenditures in ZiG; issuance of local currency bonds; financial market development; fiscal operations to incentivize ZiG.
  - Policy on surrender requirements: refrain from further increases until comprehensive FX liberalization strategy adopted; temporary/time‑bound increases could be justifiable if capital outflows intensify.
  - RBZ institutional strengthening: update RBZ Act to reinforce central bank autonomy; plan to request a Safeguards Assessment prior to a possible IMF financial arrangement.

### Program monitoring, reporting, and definitions
- Test dates: end‑March 2026, end‑June 2026, end‑September 2026.
- Quantitative targets and structural benchmarks monitored per the TMU.
- Data reporting matrix (selected):
  - RBZ — Monthly — 2 weeks: Balance sheet and income statement including NFA, NDA and RBZ other liabilities.
  - RBZ — Weekly — 1 week: NIR, NFA, CBS 1/RBZ and ZiG and USD RTGS balances.
  - RBZ — Monthly — 1 month: RBZ FX cash flow using agreed template.
  - RBZ/ZIMSTAT — Quarterly — 3 months: Balance of payments.
  - MoFED&IP — Monthly — 6 weeks: Central government operations — revenue, expenditure, gold incentive subsidies, financing, and domestic debt details.
  - MoFED&IP and RBZ — Quarterly — 4 weeks: Update on QTs and SBs implementation status.
- Key program definitions and rules:
  - Debt definition per Guidelines on Public Debt Conditionality (Executive Board Decision No. 16919‑(20/103)); detailed definitions for primary balance floor, credit to nonfinancial public sector, NIR, contracting/guranteeing new external non‑concessional debt, ZiG monetary base, protected social spending, central government deposits, and gold incentives are specified in the TMU.
  - Gold priced at US$4341.2 per fine troy ounce for NIR calculations.
  - Program exchange rate (WBWS): 25.98 ZiG / USD (memorandum item).

### Priority staff recommendations (operational policy package)
- Fiscal and governance:
  - Preserve fiscal discipline: cap expenditures at originally budgeted level and save revenue overperformance to build a buffer of at least US$275 million.
  - Strengthen fiscal governance and transparency: assess and cap gold‑delivery incentives; strengthen governance of liability‑management operations; ensure domestic arrears cleared only after audit verification and budget allocation.
  - Strengthen debt‑management governance: review PDM Act regulations governing LMOs before second SMP review; consult IMF staff in advance on planned LMOs.
- Monetary and FX:
  - Maintain tight monetary policy via contained money growth; phase out NNCDs and transition to indirect instruments; monitor impact of policy rate cut and tighten if FX pressures intensify.
  - Develop and implement a comprehensive FX market liberalization strategy with clear sequencing and measures to bolster ZiG demand.
- Financial stability and PFM:
  - Strengthen financial stability framework: complete Basel III implementation steps, finalize Net Stable Funding Ratio standard by end‑2026, and enhance bank resolution capacity.
  - Advance PFM and social protection: operationalize USD payments through PFMS, implement full earmarking of funds, advance TSA roadmap, and strengthen employment controls and wage‑bill management.
- Debt and reengagement:
  - Advance debt reconciliation, disclosure, and a credible, fully financed plan to clear multilateral arrears (including about US$1.5 billion to the World Bank and US$1.1 billion to other IFIs) as prerequisites for a Fund‑supported UCT‑quality program.

*International Monetary Fund staff report (Zimbabwe, 2026).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- Zimbabwe has continued to consolidate stabilization gains under the Staff-Monitored Program (SMP) despite external shocks.
- The 10-month SMP, approved by IMF Management on March 27, prioritizes prudent budget execution, improved cash and expenditure controls, improved social protection delivery, sustained monetary discipline, and governance reforms to enhance transparency and manage fiscal risks.
- Zimbabwe’s external public debt is assessed as unsustainable and in distress. Successful completion of the SMP is part of the authorities’ broader strategy to re-engage with the international community to advance external arrears clearance and debt restructuring.
- The war in the Middle East affected Zimbabwe through higher fuel, fertilizer, and food prices, as well as increased trade disruptions. While international gold prices have fallen since the onset of the war, they remain high, supporting economic activity, fiscal revenues, and foreign exchange (FX) inflows.

### Recent economic developments and performance
- Real GDP growth:
  - 2025: 8.3 percent (up from 1.7 percent in 2024).
  - 2024: 1.7 percent.
  - Staff projection earlier: 7.5 percent for 2025 (actual exceeded projection).
- Nominal GDP:
  - Increased by 88 percent compared to 72 percent projected earlier; deviation driven primarily by a statistical rebasing upon completion of the economic census.
- Growth drivers:
  - Mining activity amid record-high gold prices.
  - Rebound in agricultural production following the 2024 drought.
- Program performance through end-March:
  - All five quantitative targets met.
  - All but one indicative target met; the floor on protected social and priority spending was missed.
  - All structural benchmarks scheduled for end-March and end-June were met.

### Policy priorities and staff recommendations
- Overarching policy objective: preserve macroeconomic stability, build buffers, and protect the most vulnerable.
- Monetary policy:
  - Stance should remain tight.
  - Revenue overperformance should be saved as a buffer.
  - Improve monetary and FX market operations, aligned with a broader FX liberalization strategy.
- Fiscal policy and governance:
  - Strengthen expenditure and arrears controls.
  - Improve governance over gold incentives and liability-management operations.
  - Advance public financial management (PFM) and social protection reforms.
  - Stronger safeguards for domestic arrears clearance.
- Program strengthening proposals for SMP completion review:
  - Introduce a new quarterly floor on government deposits.
  - Introduce a ceiling on gold-incentive payments.
  - Adopt a rules-based approach to early redemptions and other liability-management operations.
  - Support the authorities’ request to modify the quantitative target (QT) floor on the primary budget balance of the central government for end-September 2026.

### Outlook and risks
- Near-term outlook:
  - Growth projected at 5 percent in 2026.
  - Growth projected at 4.2 percent over the medium term.
  - Inflation expected to remain in single digits under tight policies.
  - Current account surplus projected to narrow but remain robust.
- Main downside risks:
  - A major El Niño event.
  - Renewed war in the Middle East with trade disruptions and energy and gold price volatility.
  - Policy slippages.
- Policy implication: underscores the need to rebuild buffers and maintain disciplined implementation.

### Mission and institutional engagement
- Discussions took place in Harare during June 9-18, 2026.
- The mission met with Finance Minister Hon. Prof. Ncube, Reserve Bank of Zimbabwe Governor Dr. Mushayavanhu, the Chief Executive Officer of Mutapa Investment Fund Dr. Mangudya, other senior government officials, and representatives from the private sector.
- IMF staff team: Wojciech Stanislaw Maliszewski (Head), Christopher Dielmann, Silvia Domit, Yehenew Endegnanew, Issouf Samake (all AFR), Justine Ayebare (STA), Dominique Lam (MCM), and Zhibo Tan (SPR). Daniel Gurara (IMF Resident Representative), Petronella Chishawa, Andrew Ziswa, and Danai Chihota (local staff in the IMF Harare Office) assisted the team. Gonaya Basutli (OED), World Bank staff, and the authorities’ financial advisers participated in the meetings. Adi Baurzhanuly and Mistire Kifle (both AFR) assisted the team from headquarters.

*EXECUTIVE SUMMARY. July28, 2026.*

### 2026. Tobacco—the main commercial crop—is experiencing a bumper seasoneven as prices

### 2026. Tobacco—the main commercial crop—is experiencing a bumper seasoneven as prices softened from last year, and tourismactivityremained resilient.

### Recent macroeconomic developments and key indicators
- Inflation and prices
  - Monthly CPI inflation increased to 1.5 percent m/m in April; annual CPI inflation rose to 4.7 percent in June.
  - Annual CPI inflation is expected to reach 8 percent by end-2026.
- External sector and trade
  - Current account surplus of about US$2.1 billion, or 3.6 percent of GDP in 2025.
  - Current account surplus continued in Q1 2026; exports rose by 58 percent year-on-year in Q1 2026; imports increased by 30 percent over the same period.
  - Current account is projected at 3.2 percent of GDP in 2026.
- Growth
  - Real GDP growth expected at 5 percent in 2026 and 4.2 percent thereafter (medium term).
  - Baseline assumes temporary energy/input price shock and robust gold production.
- Reserves and external position
  - External position in 2025 was moderately weaker than implied by medium-term fundamentals and desirable policies.
  - Reserve targets remain unchanged despite lower projected current account surplus.

### Monetary policy, liquidity management, and exchange rate
- Reserve Bank of Zimbabwe (RBZ) stance and instruments
  - ZiG base money change through Q1: ZiG 425 million (actual) vs. ZiG 602 million (Q1 program target).
  - Zero-interest NNCDs outstanding at ZiG 5,869 million at end-May.
  - In June, RBZ introduced a ZiG-Denominated Term Deposit Facility, auctioning ZiG 330 million at about 11 percent for 90 days and attracting ZiG 110 million at 8 percent for 30 days.
  - Policy rate lowered from 35 to 30 percent.
- Credit, deposits, and composition
  - ZiG credit remained flat while USD lending expanded.
  - About 80 percent of banking sector deposits are US-denominated.
- Exchange rate market
  - WBWS ZiG-USD exchange rate stable; parallel rate gap narrowed from around 19 percent (beginning of year) to around 16 percent in latest data.
  - RBZ selling to the WBWS market accounted for around 80 percent of transactions in the first five months of 2026.
  - RBZ was a net purchaser of FX in Q1 even as FX intervention picked up in Q2.
- Staff advice and operational guidance
  - RBZ should maintain a tight policy stance and be ready to tighten further if pressures intensify.
  - NNCDs should be replaced by market-based indirect instruments as feasible; the policy rate should be phased out as reliance on indirect instruments increases.
  - The ZiG-Denominated Term Deposit Facility is welcomed as a starting point for indirect monetary operations.
  - A comprehensive FX market liberalization strategy should define monetary and FX framework, a sequenced transition, and measures to promote ZiG demand (e.g., designating more taxes payable in local currency).

### Fiscal performance, composition, and management
- Q1 performance and composition
  - Overall cash balance: US$304 million or 0.5 percent of GDP.
  - Primary cash balance: US$371 million or 0.6 percent of GDP.
  - Revenues exceeded the target by 0.8 percent of GDP; program projected annual revenue at US$9 billion vs. US$9.4 billion in the budget.
  - Q1 revenue overperformance about US$560 million, exceeding the US$400 million gap.
  - Spending was 0.4 percent of GDP above the program; Q1 overruns mainly in transfers and subsidies, exceeding cap by about US$275 million.
  - Gold incentives for artisanal miners: reached US$118 million in Q1 (US$141 million by end-April), above program limit and the US$16 million annual budget.
  - Capital spending included a large net repayment of unaudited arrears of US$95 million.
- Amortization and below-the-line outlays
  - Amortization payments in Q1: US$398 million (0.6 percent of GDP) vs. program US$103 million (0.2 percent of GDP), including:
    - Early redemption and arrears payments of bonds: US$118 million.
    - Partial clearance of ‘open positions’ to mining houses: US$111 million.
    - Higher repayments to Afreximbank: US$36 million.
    - Unplanned payments for blocked funds: US$34 million.
- Fiscal projections and buffers
  - 2026: Revenue projected at US$10.3 billion (16.0 percent of GDP); spending projected to increase to the original budget of US$9.5 billion. Cash primary balance expected at about 1.7 percent of GDP. Below-the-line largely reverting to original financing assumptions results in a cash buffers build-up of US$275 million.
  - 2027 and medium term: Revenues projected to increase modestly; clearance of past expenditure arrears (estimated at 2.9 percent of GDP, or US$1.7 billion, in 2025) planned through 2030.
- Program adjustments and governance measures
  - Proposal to add a quarterly indicative target setting a floor on central government deposits at the RBZ and commercial banks, with a symmetric adjustor for revenue over-/under-performance relative to the indicative revenue target (proposed to be revised to US$10.3 billion).
  - Proposal to cap gold delivery incentives: new indicative target of US$300 million this year; MoFED&IP to assess relevance and fiscal sustainability of the scheme and rationalize it in the 2027 National Budget.
  - Strengthen debt-management governance: review regulations under the Public Debt Management Act governing LMOs before second SMP review; consult IMF staff in advance on planned LMOs.
  - Domestic arrears to be cleared in line with the arrears-clearance strategy and only after audit verification of eligibility.

### Banking sector and financial stability
- Soundness and performance
  - Banking sector capital adequacy ratio: 23 percent in March (regulatory minimum 12 percent); declined from 28 percent in December 2025.
  - Overall non-performing loan (NPL) ratio: 2.6 percent through March.
  - Share of watch-listed loans: 9.8 percent.
  - Banking sector liquidity: liquid-asset-to-total-asset ratio at 33 percent; liquid-asset-to-short-term liabilities ratio at 46 percent.
- Policy and regulatory developments
  - RBZ adopted Liquidity Coverage Ratio; plans to issue Net Stable Funding Ratio standard by end of 2026.
  - Basel III capital rules implementation underway; Asset Quality Reviews completed for four banks.
  - RBZ reviewed organizational structure and is increasing staffing of the bank resolution unit.
  - IMF technical assistance requested on reviewing the net FX open position formula.

### Debt, arrears, and path to sustainability
- Debt stock and composition (end-2025)
  - Total public and publicly guaranteed debt: US$22.7 billion (38.0 percent of GDP).
  - External public debt: US$15.2 billion (25.5 percent of GDP); over 50 percent in arrears vis-à-vis external official creditors.
  - Selected components (millions of US dollars):
    - Total public debt: 12,908.0 (DOD) + 9,749.1 (Arrears and Penalties) = 22,657.1 (Total) (38.0 percent of GDP).
    - External debt: 7,592.7 (DOD) + 7,629.9 (Arrears and Penalties) = 15,222.6 (25.5 percent of GDP).
    - Multilateral creditors total: 140.2 (DOD) + 2,742.9 (Arrears and Penalties) = 2,883.1 (4.8 percent of GDP).
    - Bilateral creditors total: 1,596.0 (DOD) + 4,857.4 (Arrears and Penalties) = 6,453.4 (10.8 percent of GDP).
    - Commercial creditors total: 1,877.0 (DOD) + 29.6 (Arrears and Penalties) = 1,906.6 (3.2 percent of GDP).
    - Domestic debt total: 5,315.3 (DOD) + 2,119.3 (Arrears and Penalties) = 7,434.5 (12.5 percent of GDP).
    - Legacy debt: 3,979.6 (Total) (6.7 percent of GDP).
    - Former farm owners: 3,496.8 (Total) (5.9 percent of GDP).
- Arrears clearance and reengagement
  - SMP seen as central to building reform credibility and advancing arrears clearance with IFIs.
  - Upfront clearance or agreed plan needed to clear about US$1.5 billion in arrears to the World Bank and US$1.1 billion in arrears to other IFIs.
  - Authorities engaged with Paris Club Secretariat for bilateral debt reconciliation and with MEFMI for domestic debt reconciliation.
  - Authorities committed to improving timeliness and comprehensiveness of debt disclosure and integrating DMFAS 7 with PFM and RBZ systems.
- Staff assessment
  - Debt assessed as unsustainable and in distress (2025 Article IV DSA).
  - Restoring debt sustainability requires sustained reform implementation, a credible and fully financed plan to clear multilateral arrears, debt reconciliation, improved disclosure, and a credible strategy for engaging official bilateral creditors.

### Program performance, structural benchmarks, and capacity building
- Program monitoring and results through end-March
  - All five quantitative targets (QTs) met.
  - Net FX reserves adjusted for autonomous factors increased by US$107 million (above US$74 million program floor).
  - Ceilings on ZiG monetary base and RBZ credit to the nonfinancial public sector met.
  - All but one indicative target met; the floor on protected social and priority spending breached by US$84 million.
  - All structural benchmarks assessed at this review were met, including improvements in taxpayer register quality, TSA reform strategy, Zimbabwe Social Registry user manual, and Mutapa reporting commitments.
- Capacity development (CD) and technical assistance
  - Fund staff (FAD) supporting medium-term staffing plan and TSA reform strategy.
  - Two dedicated CD missions agreed to support domestic revenue mobilization (tax administration and tax policy); tax policy mission completed in April 2026.
  - World Bank support on PFM-related structural benchmarks and social protection reforms.
- Program modality adjustments
  - Revenue collection and primary balance targets updated to reflect stronger revenue performance.
  - New floor on central government deposits introduced; redefined ceiling on RBZ government financing on a gross basis.
  - New ceiling on gold-incentive payments included; review framework for liability-management operations under the Public Debt Management Act required.
  - No changes to remaining review schedule under the SMP.

### Outlook, risks, and central policy recommendations
- Outlook summary
  - Growth projected at 5 percent in 2026 and 4.2 percent over the medium term.
  - Inflation forecast to reach 8 percent by end-2026; current account surplus projected at 3.2 percent of GDP in 2026.
  - Projected revenue for 2026 at US$10.3 billion (16.0 percent of GDP); spending to US$9.5 billion.
- Major downside risks
  - Stronger 2026/27 El Niño weather event.
  - Intensification of the war in the Middle East, causing prolonged higher global energy prices, higher food and fertilizer prices, weaker external demand, and shipping disruptions.
  - Gold price volatility and domestic policy slippages.
  - Materialization of risks could halve projected 2027 growth, reduce revenues, and increase government spending to procure grain.
- Priority policy recommendations (staff)
  - Preserve fiscal discipline: cap expenditures at the originally budgeted level and save revenue overperformance to build a buffer of at least US$275 million.
  - Strengthen fiscal governance and transparency: assess and cap gold-delivery incentives; strengthen governance of liability-management operations; ensure domestic arrears cleared only after audit verification and budget allocation.
  - Maintain tight monetary policy via contained money growth; phase out NNCDs and transition to indirect instruments; monitor impact of policy rate cut and tighten if FX pressures intensify.
  - Develop and implement a comprehensive FX market liberalization strategy with clear sequencing and measures to bolster ZiG demand.
  - Strengthen financial stability framework: complete Basel III implementation steps, finalize Net Stable Funding Ratio standard by end-2026, and enhance bank resolution capacity.
  - Advance debt reconciliation, disclosure, and a credible, fully financed plan to clear multilateral arrears (including about US$1.5 billion to the World Bank and US$1.1 billion to other IFIs) as prerequisites for a Fund-supported UCT-quality program.
  - Improve social protection and PFM execution: operationalize USD payments through the PFMS, implement full earmarking of funds, advance the TSA roadmap, and strengthen employment controls and wage-bill management.

*International Monetary Fund staff report (Zimbabwe, 2026).*

### introduction of thenewonesto build fiscal buffers andcontain gold-incentivepayments.

### 1zweea2026002 - introduction of thenewonesto build fiscal buffers andcontain gold-incentivepayments.

### Policy commitments and staff support
- Authorities committed to:
  - introduce the new nest to build fiscal buffers and contain gold-incentive payments.
  - address liability-management risks and strengthen arrears controls.
- IMF staff:
  - supports these changes and the authorities’ request to modify the QT floor on the primary budget balance of the central government for end-September 2026.
  - emphasizes that strong and consistent implementation—supported by targeted capacity development—will be essential to translate the current window of macroeconomic stability into a stronger reform track record, rebuild buffers, and advance the broader arrears-clearance and debt-resolution agenda.

### Key macroeconomic projections and indicators
- Real GDP growth (selected series from table): 5.3; 1.7; 8.3; 5.0; 5.0; 4.2; 4.2; 4.2; 4.2; 4.3
- Nominal GDP (US$ millions): 44,447; 45,719; 58,290; 56,713; 64,235; 66,080; 68,138; 70,224; 72,389; 74,685
- CPI (annual average): 667.47; 36.18; 1.48; 8.05; 5.2; 8.8; 8.0; 8.0; 8.0; 8.0
- Gross international reserves (US$ millions): 110; 484; 1,181; 1,537; 1,934; 2,452; 2,969; 3,487; 4,004; 4,522
  - Months of imports of goods and services: 0.1; 0.5; 1.2; 1.3; 1.7; 2.0; 2.3; 2.6; 2.8; 3.0

### Public debt, arrears, and fiscal balances
- Consolidated public sector debt (US$ millions): 21,077; 22,461; 22,657; 22,523; 22,182; 21,378; 20,839; 20,153; 19,572; 19,436
  - Percent of GDP: 76.1; 70.4; 38.0; 42.3; 36.3; 33.7; 31.8; 29.9; 27.8; 26.5
- Public and publicly guaranteed external debt (US$ millions): 16,538; 15,326; 15,223; 15,318; 15,335; 15,056; 14,946; 14,714; 14,598; 14,605
  - Percent of GDP: 59.6; 48.0; 25.5; 28.8; 25.1; 23.7; 22.8; 21.8; 20.8; 19.9
- Arrears (US$ millions): 10,770; 10,905; 10,618; 11,842; 11,185; 11,546; 11,926; 12,326; 12,674; 13,103
  - Arrears (percent of GDP): 38.8; 36.8; 17.8; 22.3; 18.3; 18.2; 18.2; 18.3; 18.0; 17.9
- Central government (percent of GDP, USD-based):
  - Revenue and grants: 12.2; 14.4; 14.3; 16.8; 15.9; 16.0; 16.3; 16.5; 16.7; 17.1
  - Cash expenditure, total: 18.8; 12.9; 14.2; 17.0; 15.9; 14.8; 15.4; 15.8; 16.2; 16.4
  - Overall balance (cash basis): -6.7; 1.5; 0.1; -0.2; 0.0; 1.2; 0.9; 0.7; 0.8; 0.7
  - Primary balance (cash basis): -6.5; 1.8; 0.6; 0.3; 0.5; 1.7; 1.4; 1.1; 1.2; 1.1

### Central government cash operations (selected USD figures)
- Revenue (US$ millions, selected years): 5,400.5 (2023); 6,597.2 (2024); 8,359.0 (2025); 9,400.2 (2027); 9,000.0 (2029); 10,303.1 (2030 projected column heading context)
- Tax revenue (US$ millions, selected components for 2023): 5,219.8 total tax revenue; Personal income tax 1,035.5; Corporate income tax 549.1; VAT 1,550.6; Excise 685.7; Customs 442.1
- Cash expenditure, total (US$ millions, 2023): 8,374.5
  - Current expenditure (US$ millions, 2023): 4,671.7
  - Employment costs (US$ millions, 2023): 2,492.3
  - Interest payments (paid, US$ millions, 2023): 92.1
  - Capital expenditure and net lending (US$ millions, 2023): 3,822.8
- Overall balance (US$ millions, 2023): -2,973.9
- Financing (US$ millions, 2023): 3,512.9
  - Domestic financing (net, US$ millions, 2023): 3,039.5
  - Foreign financing (net, US$ millions, 2023): 473.4
- Expenditure arrears (US$ millions, memorandum item): 404.7 (2023); 774.9 (2024); -3.9 (2025); projected dynamics thereafter shown in table.

### Balance of payments and external financing
- Current account balance (US$ millions, selected): 135 (2023); 501 (2024); 2,126 (2025); 2,120 (2027); 2,079 (2028); 1,793 (2029); 1,637 (2030); 1,351 (2031)
  - Current account (percent of GDP): 0.3; 1.1; 3.6; 3.7; 3.2; 2.7; 2.4; 1.9; 1.4; 1.1
- Exports of goods and services (US$ millions): 7,603; 8,252; 10,999; 13,825; 13,204; 13,809; 14,245; 14,812; 15,437; 16,087
  - Exports of goods and services (percent of GDP): 17.1; 18.0; 18.9; 24.4; 20.6; 20.9; 20.9; 21.1; 21.3; 21.5
- Imports of goods and services (US$ millions): 10,293; 10,715; 11,554; 13,828; 13,617; 14,539; 15,204; 16,140; 17,148; 18,086
  - Imports (percent of GDP): 23.2; 23.4; 19.8; 24.4; 21.2; 22.0; 22.3; 23.0; 23.7; 24.2
- Financial account (US$ millions): -686; -245; 1,921; 2,654; 2,132; 1,777; 1,702; 1,440; 1,087; 968
  - Direct investment (US$ millions): -604; -465; -959; -966; -986; -1,061; -1,154; -1,246; -1,346; -1,389
- External financing requirement (percent of GDP, selected row from External Financing Table):
  - Total Requirement: 2.4; 3.0; 2.5; 1.5; 1.7; 1.6; 1.7; 1.8
  - Total Sources: 1.8; 1.7; 1.4; 0.9; 1.0; 1.0; 1.1; 1.1
  - Financing Gap (I-II): 0.6; 1.3; 1.1; 0.6; 0.7; 0.7; 0.6; 0.7
  - Expected Sources of Financing: Exceptional Financing (Accumulation of arrears): 0.6; 1.3; 1.1; 0.6; 0.7; 0.7; 0.6; 0.7

### Monetary and financial sector indicators
- Money supply (M2, selected series): 712.9; 930.8; 37.6; 27.8; 43.7; 28.8; 24.0; 22.3; 20.0; 18.9
- Money base (selected series): 1,842.7; 2421.3; 44.2; 27.9; 43.7; 28.8; 23.8; 22.2; 20.0; 18.8
- Credit to the private sector (selected series): 914.1; 1,070.4; 35.3; 29.6; 49.0; 17.7; 20.6; 17.3; 16.7; 16.8
- Financial Soundness Indicators (selected, Dec-2025):
  - Regulatory capital to risk-weighted assets: 27.7
  - Capital to assets: 17.1
  - Nonperforming loans (past due > 90 days): 3.5
  - Past-due loans to gross loans: 29.7
  - Return on assets: 5.9
  - Liquid assets/total assets: 35.2
  - Loans/deposits: 62.6

### Staff emphasis and operational priorities
- Staff supports the fiscal and liability-management steps announced by the authorities and the requested modification to the QT floor on the primary budget balance for end-September 2026.
- Operational priorities highlighted:
  - Strong and consistent implementation of committed measures.
  - Targeted capacity development to ensure implementation translates macroeconomic stability into a stronger reform track record.
  - Rebuilding fiscal and external buffers and advancing arrears-clearance and debt-resolution agendas.

*Source: Zimbabwean authorities; IMF staff estimates and projections (from provided content).*

### Annex I. Risk Assessment Matrix

### Annex I. Risk Assessment Matrix

### Conjunctural Risks
- Geopolitical Tensions and Intensification of Conflicts
  - Likelihood: Rising (High)
  - Expected Impact: Medium
  - Impact summary: Rising geopolitical tensions and a weakening of multilateralism raise the risk of an escalation in military conflicts, with damage to physical and financial infrastructure, disruptions to major transit routes and supply chains, higher migration pressures,and financial market volatility. Zimbabwe’s limited direct trade with conflict zones contains the impact, but higher global trade and shipping costs, supply-chain disruptions, and any interference with gold export and refining channels would raise import costs, compress export receipts, and generatereserve pressures.
  - Policy response:
    - Diversify trade routes and partners and deepen regional integration, including through AfCFTA implementation.
    - Advance business-environment reforms, improve logistics resilience, and rebuild fiscal and external buffers.

- Commodity Price Volatility
  - Likelihood: High
  - Expected Impact: High
  - Impact summary: Supply and demand imbalances—triggered by geopolitical tensions, coordinated production decisions, shifts in investor preferences, or structural changes in demand—fuel commodity price swings, amplifying external and fiscal pressures, social unrest, and macroeconomic instability. Gold and other minerals dominate exports; a sustained decline in gold prices would markedly weaken export earnings, fiscal revenue, reserves, and growth. The impact would be deepened by any concurrent rise in oil and other import prices, widening the trade deficit.
  - Policy response:
    - Rebuild fiscal and reserve buffers while prices are favorable; allow exchange-rate flexibility and adjust monetary policy if pressures intensify.
    - Protect priority social spending, strengthen revenue mobilization, and advance export diversification.

- Trade-related Risks (Protectionism and Trade Disruptions / New Trade Agreements)
  - Likelihood: High
  - Expected Impact: Medium
  - Impact summary: Protectionism and Trade Disruptions: Tariff and nontariff measures disrupt global supply chains, weighing on activity while increasing inflation. Trade diversion triggers broader protectionism. New Trade Agreements: Tangible progress in trade talks reduces uncertainty and trade barriers. Wider cooperation on services, FDI, and taxation boosts investment and bolsters public finances. As a small, relatively closed economy, Zimbabwe is only modestly exposed to direct tariff effects, but trade diversion could still impactmineraland agriculture exports and raise input costs. Conversely, deeper regional integration and trade realignment offer opportunities to expand exports and attract relocating investment.
  - Policy response:
    - Diversify export markets and deepen regional integration, including AfCFTA implementation.
    - Improve the business environment, reduce trade costs, and strengthen competitiveness to attract FDI and seize trade-diversion opportunities.

- Social Discontent
  - Likelihood: Medium
  - Expected Impact: Medium
  - Impact summary: Persistently high living costs, youth unemployment, and inequality—amid an erosion in governance standards and pressures from geoeconomic realignments—trigger social unrest, political repression, and instability, affecting countries’ capacity to pursue economic reforms. Recent stabilization has eased near-term social pressures, but very high youth unemployment, a large informal sector, and still-elevated living costs remain vulnerabilities if growth disappoints.
  - Policy response:
    - Protect priority social spending and improve delivery of social programs.
    - Advance inclusive labor-market and governance reforms to support jobs, strengthen trust, and sustain reform ownership.

### Structural Risks
- Labor Shortages and Remittances
  - Likelihood: High
  - Expected Impact: Medium
  - Impact summary: Tighter immigration policies exacerbate labor shortages in aging destination economies, reducing potential output and straining their fiscal balances. Origin countries see depressed remittances and incomes and weaker external balances, though a larger labor force could partly offset the remittance decline over the medium term. Remittances are a large and stable source of foreign exchange and household income. Inflows have held up so far, but tighter immigration policies and periodic tensions withneighboring countrieshostingZimbabwean migrantscould reduce remittances, while returning migrants could add to domestic labor-market pressures.
  - Policy response:
    - Lower remittance costs, deepen financial inclusion, and engage regionally on labor migration arrangements.
    - Advance job-creating private-sector reforms, support skills retention and reintegration, and maintain reserve buffers.

- Climate Change
  - Likelihood: Medium
  - Expected Impact: High
  - Impact summary: Extreme climate events and rising temperatures could cause loss of life, damage to infrastructure, food insecurity, supply disruptions, and heightened economic and financial instability. Agriculture is central to output, employment, and exports, and the economy is highly vulnerable to droughts and floods. A renewed El Niño–driven drought would lower agricultural output and hydropower generation, worsen food insecurity, raise import needs, and add to fiscal and external pressures.
  - Policy response:
    - Protect vulnerable groups and priority spending, create fiscal space for grain imports, and seek humanitarian support if needed.
    - Invest in climate resilience, irrigation, drought preparedness, and energy diversification.

### Domestic Risks
- Fiscal policy slippages
  - Likelihood: High
  - Expected Impact: High
  - Impact summary: Lack of adjustment to financing gaps and limited additional financing options result in recourse to monetary financing, triggering FX pressures and threatening price and financial sector stability.
  - Policy response:
    - Close financing gaps upfront, save revenue overperformance, and prepare contingency measures for shortfalls.
    - Strengthen revenue collection, prioritize spending, and avoid monetary financing.

- Slow reengagement from delays in advancing reforms
  - Likelihood: High
  - Expected Impact: High
  - Impact summary: Delays in advancing reforms and garnering support from the international community would maintain the status quo, exacerbating economic imbalances and worsening policy confidence.
  - Policy response:
    - Advance SMP and governance reforms to strengthen international support, enable arrears clearance, unlock IFI financing, and gradually restore market access and policy credibility.

### Risk Assessment Matrix methodology note
- The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path.
- The relative likelihood is the staff’s subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50 percent).
- The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Non-mutually exclusive risks may interact and materialize jointly. The conjunctural shocks and scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current baseline. Structural risks are those that are likely to remain salientover a longer horizon.

*Annex I. Risk Assessment Matrix (Zimbabwe) — IMF*

### 0.5 percentage point of GDP(MEFP, Table 2).

### 1zweea2026002 - 0.5 percentage point of GDP(MEFP, Table 2).

### Program implementation and structural benchmarks
- All indicative targets were met except the floor on protected social and priority spending, which was missed because of delays in disbursements early in the program period.
- The Government will prioritize and accelerate social spending to meet the annual target.
- Fiscal structural reforms progressing:
  - End-March benchmark on taxpayer register quality met.
  - Very good progress toward end-June benchmarks on the Zimbabwean Social Registry operational Manual and the Treasury Single Account.
  - Continuous structural benchmark requiring prior Treasury approval for borrowing or debt-like obligations by Mutapa Investment Fund and its subsidiaries has been observed (MEFP, Table 3).

### Commitment to macroeconomic stability and reforms
- The Government remains committed to maintaining macroeconomic stability and advancing structural reforms under the SMP.
- Policy commitments:
  - Continue financing the budget without recourse to monetary financing.
  - Prevent the net accumulation of domestic expenditure arrears.
  - Strengthen fiscal discipline through continued public financial management reforms.
  - Monetary authorities will implement reforms to strengthen the monetary and exchange rate policy framework, including measures to improve the functioning of the interbank foreign exchange market and strengthen monetary policy operations.
  - Continue governance and institutional reforms to mitigate fiscal risks, enhance transparency, and build a credible policy track record for sustainable growth, macroeconomic stability, and external arrears clearanceand debt restructuring.

### Fiscal policy and public financial management
- Execution of the 2026 Budget is central to demonstrating commitment to sound macroeconomic management.
- Fiscal policy approach:
  - Support currency, exchange rate, and price stability through cash budgeting, expenditure prioritization, and disciplined budget execution.
- Domestic expenditure arrears:
  - Identified as a risk to fiscal sustainability.
  - Process of identifying, validating, and auditing domestic expenditure arrears initiated in 2025 is ongoingand is adhering to the timelines agreed in the audit terms of reference.
- Cash management and budget execution:
  - Weekly and monthly expenditure execution is being closely monitored through the Cash ManagementCommittee to ensure consistency with the approved budget and available resources.
  - As of end-March 2026, the floor on the primary budget balance was exceeded by a comfortable margin, reflecting prudent expenditure management and strong revenue performance.
  - Government will preserve fiscal buffers from stronger revenue performance to help manage potential spending pressures, including food-security needs should El Niño-related risks materializein 2027.
  - Program monitoring will include a floor on central government deposits calibrated to build an adequate buffer by year-end, while allowing for adjustments if revenue performance differs from program projections.

### Domestic revenue mobilization
- Domestic revenue mobilization remains the main source of budget financing and a key pillar for achieving development goals.
- Domestic Revenue Mobilization Strategy-2026–2030 focuses on targeted tax policy measures, stronger tax administration, and legislative reforms.
- Revenue performance and benchmarks:
  - Revenue performance remained strong through end-March 2026, with the indicative target on central government revenue collection exceededby 28.4percent.
  - The end-March structural benchmark on taxpayer register quality was met through monitoring and quarterly reporting of the percentage of new VAT and PAYE registrants who file and pay (MEFP Table 3, SB #4).
- Further actions:
  - Strengthen taxpayer compliance.
  - Broaden the effective tax base.
  - Implement a compliance-improvement strategy for large and medium-sized corporate taxpayers.
  - Develop a risk-based tax arrears recovery strategy.

### Public wage bill management
- Management of the public wage bill is central to strengthening expenditure policy.
- Current status and targets:
  - Government is managing employment costs to ensure that theyremain within the 50 percent of total revenue collections.
  - In the 2026 budget, employment costs are slightly above the 50-percent threshold; nearterm and medium-term policy measures have been instituted to reduce this ratiotodesired levels.
- Policy measures to contain employment costs:
  - Align salary adjustments with revenue performance.
  - Implement recommendations from the Job Evaluation Exercise Reports.
  - Rationalize staffing levels based on workload assessments.
  - Maintain a hard freeze on new recruitment except in critical sectors.
  - Promote multitasking, and redeploy staff from MDAs with excess personnel to those with shortages.
  - Digitization of human-resource management systems.
- Medium-term actions:
  - Public Service Commission (PSC) and MOFED&IPwill develop a medium-term staffing plan with a view to bringing the employment cost to below 50 percent of revenue, ensuring that the total wage bill-to-GDP ratio converges towards targets.

*Source: 1zweea2026002 - 0.5 percentage point of GDP(MEFP, Table 2).*

### 8.5 percent over the medium run (MEFP Table 3, SB #6).

### 1zweea2026002 - 8.5 percent over the medium run (MEFP Table 3, SB #6)

### Social spending and social programs
- Government remains committed to maintaining the budgeted level of social spending of US$755 million for social programs anchored on the Zimbabwe Social Registry.
- Programs covered (as listed): Presidential Input Scheme; Basic Education Assistance Module (BEAM); Food Deficit Mitigation; Harmonized Cash Transfers; the Social Protection Management Information System; Education; Health; Recurrent spending on teaching and learning materials; school feeding program; Student Stipend Support portion of the National Education and Training Fund; Recurrent spending on preventative health programmes; medical supplies procured for ARVs and TB drugs; co-financing of GAVI programmes; current expenditures for government hospitals and health centres; grant aided institutions Parirenyatwa/Mission Hospitals/Local authorities; recurrent expenditures on maternal and child health.
- Indicative target on protected social and priority spending was missed at end-March due to the late start of disbursements following the staff-level agreement on February 6; most related payments were made in March 2026 and spending will be reprofiled to subsequent quarters to ensure the annual target is met.
- In coordination with the Ministry of Public Service, Labor and Social Welfare, a user manual covering all operational modules of the Zimbabwe Social Registry (ZISO) — registration, eligibility determination, updating, and data management — has been adopted and published (MEFP Table 3, SB #3).

### Cash management, TSA, and PFMS reforms
- To contain fiscal risks from the gold incentive scheme, the Cash Management Committee will limit total spending on the gold incentive through end-2026 to US$300 million; the 2027 Budget will evaluate continued relevance and fiscal sustainability of the scheme.
- Cash Management Committee (CMC) operationalized with a revised circular clarifying mandates and responsibilities; CMC holds regular weekly meetings to monitor revenue performance, expenditure execution, and cash releases.
- A standard monthly cash management template for revenue collections and expenditure management was finalized.
- An IMF technical assistance mission was conducted during May 5–18, 2026 to support development of the Treasury Single Account (TSA) framework and implementation strategy.
- Ministry of Finance, Economic Development and Investment Promotion developed a TSA reform strategy including a bank account rationalization plan and phased approach for introducing a core TSA and expanding coverage (MEFP Table 3, SB #7). Expected benefits: improved payment efficiency, transparency, accounting, and more effective cash and liquidity management in coordination with the RBZ.
- PFMS updates:
  - US dollar payment functionality operationalized in the PFMS.
  - Treasury circular requires all MDAs to process all USD payment requests through the PFMS; Treasury will issue payment instructions exclusively from the PFMS.
  - PFMS will be configured to require Funds Reservations for all expenditures, including recurring costs and capital projects, and to record earmarking for multi-year capital projects using Internal Order numbers (MEFP Table 3, SB #5).

### Expenditure arrears strategy, audits, and controls
- Expenditure Arrears Clearance Strategy 2026–2030 tabled in Parliament on November 27, 2025: validation of arrears stock, netting out intra-public-sector obligations, and clearance of verified stock through annual budget allocations over 2026–2030.
- Current expenditure arrears estimated at about US$1.7 billion at end-2025, subject to validation through Auditor-General’s Office audits.
- Government allocated US$318.6 million in the 2026 National Budget toward expenditure arrears clearance.
- Clearance mechanisms include non-tradable five-year securities and voluntary reverse-auction buybacks within the approved budget envelope, prioritizing arrears with higher socioeconomic impact.
- Auditor-General’s Office Terms of Reference adopted for independent audits of expenditure arrears across MDAs for end-2024 and end-2025; agreed audit workplan (MEFP Table 2):
  - First reports covering dam construction, road development, and MoFED&IP expenditure arrears to be completed by July 3, 2026.
  - Input Support Scheme report by August 8, 2026.
  - Any outstanding categories by August 28, 2026.
- Revised circular to MDAs for improved domestic expenditure arrears monitoring issued; quarterly arrears reporting now in place.
- Net reduction of domestic expenditure arrears of US$94.62 million in the first quarter of 2026 for three initial focus ministries, compared with the SMP ceiling of zero net accumulation.

### Domestic debt management, liability management, and disclosure
- Government will develop the domestic debt market and operationalize the Medium-Term Debt Strategy through the Annual Borrowing Plan, strengthening cost-risk analysis and aligning annual borrowing decisions with strategy objectives.
- Gradual move toward a market-based auction model for securities issuance announced in the 2026 Budget; auction results to be published by the RBZ.
- Review of regulations under the Public Debt Management Act to determine coverage, methodology, approval process, and reporting requirements for liability management operations; review to be completed prior to the second SMP review.
  - Objective: ensure liability management operations are fiscally justified, transparent, consistent with the MTDS, and supported by a PDMO technical assessment methodology that evaluates gains relative to original contractual terms and fiscal and cash-flow implications.
  - Any planned liability management operation will be consulted with IMF staff in advance.
- Timely and comprehensive disclosure commitments:
  - Domestic debt issuance data published in the public debt bulletin in July and November including the borrowing plan.
  - PDMO undertaking a domestic debt instruments validation exercise with MEFMI support expected to be completed by end of July 2026; validated data to be published on the Treasury website followed by quarterly Treasury securities reports covering regular issuances, outstanding stock, maturity profile, and routine refinancing.
  - Annual Borrowing Plan and public debt bulletin to explain material deviations from the Annual Borrowing Plan.

### Mutapa Investment Fund governance and fiscal risk management
- Mutapa Investment Fund released its 2025 abridged audited financial results in April 2026 and had published inaugural financial statement in December 2025.
- Mutapa has started publishing financial reports for portfolio companies; reports for 14 portfolio companies already published.
- Mutapa will publish audited IFRS-consistent financial statements for all subsidiaries, excluding those under Corporate Rescue Proceedings or Administration: 21 subsidiaries for the 12-month period ending December 31, 2024, and 5 subsidiaries for the period ending December 31, 2023 (MEFP Table 3, SB #9).
- Structural benchmark observed: Mutapa and all its subsidiaries (excluding those under Corporate Rescue Proceedings or Administration) refrain from contracting, guaranteeing, or otherwise assuming any borrowing or debt-like obligation without prior written approval of the Ministry of Finance, Economic Development and Investment Promotion (MEFP Table 3, SB #8).
- MOFED&IP will produce, in consultation with Fund staff, an extended Fiscal Risks Statement quantifying and disclosing fiscal risks from SOE financial performance; Mutapa and subsidiaries to publish all contingent liabilities and borrowings, with borrowing above specified thresholds subject to prior Ministerial approval and Parliamentary notification.

### FX market, exchange rate policy, and monetary policy framework
- Measures to clarify exchange rate policy and enhance FX market transparency include:
  - Progress in stabilizing the FX market and the parallel market premium through tight monetary policy stance and regular FX market interventions using proceeds from surrender requirements.
  - RBZ and MOFED&IP consolidated FX market regulations: banks free to determine exchange rates in the interbank market and with clients; all willing sellers of FX free to set FX prices; removal of rules requiring banks to ration or prioritize FX sales to customers.
  - MOFED&IP repealed Statutory Instrument 81A to eliminate restrictions on pricing of goods and services based on the WBWS rate.
  - August 2025 Monetary Policy Statement communicated a hybrid framework with price stability as the primary objective, nominal exchange rate as the intermediate target, and reserve money as the operational target.
  - Foreign Exchange Trading system development at an advanced stage: RBZ completed Pilot User Acceptance Testing with five selected banks and is incorporating feedback; RBZ engaging World Bank for system validation.
- Commitments to consolidate progress and improve price signals:
  - IMF staff to be provided timely information on the parallel market premium and daily positions of uncovered foreign exchange demand (MEFP Table 3, SB #1).
  - Methodologies for computing reference rate series refined using a weighted average price of all market transactions.
- Strategy to further liberalize the FX market (MEFP Table 3, SB #2) to support transition to a "mono-currency" system and inflation targeting framework; developed jointly by MOFED&IP and RBZ with IMF technical assistance as necessary. Strategy elements include:
  - Promoting demand for ZiG through economic incentives, fiscal operations (e.g., increasing the share of Treasury's revenues and expenditures in ZiG), public debt management (e.g., issuance of local currency bonds), financial market development, and capital flow management.
  - Improving monetary policy operations through strengthened liquidity forecasting and market-based open market operations (OMOs) using indirect instruments; development of analytical toolkits to assess relationships between primary objective, intermediate target, and operational target.
  - Enhancing monetary policy effectiveness and liquidity management: RBZ commenced issuance of ZiG Denominated Term Deposit Facility (ZiGDTDF) in June 2026 with tenors of 30, 60, and 90 days; instrument is a short term tradable and liquid asset qualifying for prescribed asset status to assist in mopping up excess liquidity as part of transition from direct to indirect instruments.
  - Enhancing FX market functioning and developing an FX intervention strategy aligned with RBZ's risk appetite and program targets.
  - Advancing the World Bank assessment of the FX trading platform: RBZ submitted documentation on June 30, 2026; World Bank preliminary assessment and interactive engagements in July and August 2026; three-day in-person mission proposed in August 2026 to support finalization; final World Bank report by end-August 2026.
  - Finalizing and operationalizing the new FX trading system: World Bank report to support final User Acceptance Tests with all 23 Authorized Dealers and RBZ to finalize FX Trading System by end-September 2026, with a view to operationalizing the new system in Q4 2026.
- Policy on surrender requirements: refrain from further increases until the comprehensive FX liberalization strategy is adopted; temporary/time-bound increases could be justifiable in response to intensified capital outflows and will be channelled through the market if applied.
- RBZ institutional strengthening: update RBZ Act to reinforce central bank autonomy and clarify policy mandate; under the SMP, the RBZ will not extend credit to the government. Plan to request a Safeguards Assessment (SA) prior to commencement of a possible IMF financial arrangement.

### Financial sector stability measures
- Strengthening financial stability framework guided by the 2018 Financial Sector Stability Review (FSSR):
  - Adopted Basel III Liquidity Coverage Ratio; finalizing Net Stable Funding Ratio guidelines.
  - Developing guidelines for Basel III capital rules with IMF technical assistance.
  - Improving supervisory approaches on corporate governance, cybersecurity, payment system oversight, macroprudential, and crisis management; implementing consolidated supervision.
  - Continued asset quality thematic reviews (AQRs) to validate banks' credit risk management practices.
  - February 2025 Circular directing banking institutions to comply with FX net open positions of 10 percent (single currency) and 20 percent (all currencies); consultation with banking industry underway, reviewing formula, and planning a graduated approach to implementation.

### Governance, procurement, and anti-corruption strategy
- E-GP system introduced and National Standard Price List (NSLP) completed to set maximum procurement prices for MDAs within the E-GP system.
- Pooled procurement initiated for selected goods and services to optimize economies of scale.
- Government will prepare, in consultation with IMF staff, a comprehensive anti-corruption strategy accompanied by a policy matrix with responsibilities, timelines, and measurable actions (MEFP Table 3, SB #10); the strategy will be published once finalized.

### Program monitoring
- Program monitoring based on quantitative targets (MEFP Table 2) and structural benchmarks (MEFP Table 3) as defined in the Technical Memorandum of Understanding (TMU).
- SMP remaining test dates after the end-March 2026 test date are set for end-June and end-September 2026 (10-month SMP).
- Government will continue providing IMF staff with statistical data and other information specified in the TMU and any additional information IMF staff may request.
- Program monitoring committee established at SMP outset, including representation from the IMF Resident Representative Office, will continue coordinating preparation of review missions and assessment of program performance.

*Source: 1zweea2026002 - 8.5 percent over the medium run (MEFP Table 3, SB #6).*

### 1. Floor on the primary budget balance of the central government (US$ million) 3/47371Met1361362008992711,094

### 1. Floor on the primary budget balance of the central government (US$ million)

### Quantitative Performance Criteria and Indicative Targets
- Performance Criteria (PCs) and Continuous Ceilings (US$ million unless otherwise noted):
  - 1. Floor on the primary budget balance of the central government (US$ million) 3/:
    - End-March: 473
    - End-June: 71
    - End-Sept.: Met1361362008992711,094
  - 2. Ceiling on changes in credit to the nonfinancial public sector from the RBZ (US$ million):
    - End-March: 0-40
    - End-June: Met000000
  - 3. Floor on changes in net official international reserves (US$ million) 4/ 5/:
    - End-March: 74107Met195
    - End-June: 195
    - End-Sept.: 291
    - End-Dec.: 291
    - (Additional entries) 356, 356
  - 4. Continuous ceiling on contracting or guaranteeing of new external non-concessional debt by the central government (US$ million) 6/:
    - All periods: 00Met000000
  - 5. Ceiling on changes in ZiG monetary base of the RBZ (ZiG million):
    - End-March: 602425Met2,023
    - End-June: 2,023
    - End-Sept.: 2,5372,5373,0923,092

- Indicative Targets (ITs) (US$ million unless otherwise noted):
  - II. Indicative Targets
    - 1. Floor on central government total revenue collection (US$ million):
      - End-March: 1,975
      - End-June: 2,533
      - End-Sept.: Met4,1324,1326,3857,3989,00010,303
    - 2. Ceiling on accumulation new (net) domestic expenditure arrears (US$ million) 7/:
      - End-March: 0-95
      - End-June: Met00000
    - 3. Ceiling on central government employment costs (US$ million) 8/:
      - End-March: 840821Met2,1432,1433,4462,8554,9764,159
    - 4. Floor on protected social and priority spending (US$ million) 9/:
      - End-March: 190111Not met414414603603755755
    - 5. Ceiling on changes in domestic debt (US$ million) 4/:
      - End-March: 19-108Met88181241-36
    - 6. Ceiling on central government subsidies related to gold incentives (US$ million):
      - 248300
    - 7. Floor on central government deposits (US$ million) 10/:
      - 306275

- Memorandum items:
  - Program exchange rate, WBWS (ZiG / USD) 4/: 25.9825.9825.9825.9825.9825.9825.98

- Notes (as presented):
  - 1/ For definitions, see Technical Memorandum of Understanding.
  - 2/ The targets for end-December 2026 are all indicative targets (ITs).
  - 3/ An downward adjustor of up $300 million will apply to this floor as specified in the TMU, paragraph 9.
  - 4/ At program exchange rate as specified in the TMU, paragraph 6.
  - 5/ Excluding autonomous changes as specified in the TMU, paragraph 12.
  - 6/ An upward adjustor of up to $300 million will apply as specified in the TMU, paragraph 18.
  - 7/ As defined in the TMU, paragraph 21-23.
  - 8/ As defined in the TMU, paragraph 24.
  - 9/ As defined in the TMU, paragraph 25-26.
  - 10/ Adjusted for cumulative deviations of central government revenue relative to the revenue indicative target as specified in the TMU, paragraph 29.

### Key statistics (as listed in the table)
- Year/period header shown: 2026; columns: End-March End-June End-Sept. End-Dec. 2/

### Observed compliance indicators embedded in table cells
- Instances labeled "Met", "Not met", and "In progress" appear next to specific targets and entries as recorded above.

---

### Structural Benchmarks (SBs) — Table 3 summary

### Monetary, FX, and Financial Policies
- 1. RBZ to consolidate progress in restoring FX market equilibrium and start publishing reference exchange rate series calculated as a weighted average of all transaction prices.
  - Timing: To be assessed at each program review.
  - Objective: Improve FX market efficiency
  - Status: Met (in March and June)
- 2. RBZ to develop a comprehensive strategy to further liberalize the foreign exchange market, incorporating measures to strengthen the demand for ZiG, improving monetary policy operations, and reforming the functioning of the FX market and RBZ FX intervention policy alongside complementary fiscal measures based on inputs from MoFED&IP.
  - Timing: End-September 2026
  - Objective: Promote ZiG demand
  - Status: (no status line provided in the excerpt)

### Social programs
- 3. Ministry of Public Service, Labor and Social Welfare to adopt and publish a finalized user manual covering all operational modules of the Zimbabwe Social Registry (ZISO), including registration, eligibility determination, updating, and data management.
  - Timing: End-June 2026
  - Objective: Improve social protection
  - Status: Met

### Tax administration
- 4. Improve taxpayer register quality by monitoring and quarterly reporting the percentage of new VAT and PAYE registrants who file and pay.
  - Timing: End-March 2026
  - Objective: Support the 2026 budget revenue target
  - Status: Met

### Public Financial Management
- 5. MOFED&IP will (i) operationalize the US dollar payment functionality in the PFMS and issue a Treasury circular requiring all MDAs to process all USD payment requests through the PFMS, with the Treasury issuing payment instructions exclusively from the PFMS; and (ii) implement full earmarking of funds through Funds Reservations to capture all expenditures (including recurring costs like rents, utilities, salaries and capital projects) and to ensure that no obligations bypass budget controls. Make use of Internal Order number to capture earmarking of funds in budget execution for multi-year capital projects.
  - Timing: End-September 2026
  - Objective: Enhance PFM and monitor arrears.
  - Status: In progress

- 6. MoFED&IP to develop a medium-term staffing plan with a view to bringing the employment cost-to-revenue ratio to below fifty percent in the medium run ensuring that the total wage bill to GDP converges towards 8.5 percent of GDP over the medium term.
  - Timing: End-September 2026
  - Objective: Improve wage bill management and reduce employment in the medium run
  - Status: In progress

- 7. MoFED&IP develops a Treasury Single Account (TSA) reform strategy, including bank account rationalization plan and a phased roadmap for introducing a core TSA and expanding its coverage.
  - Timing: End-June 2026
  - Objective: Move to Treasury Single Account (TSA)
  - Status: Met

### Mutapa and fiscal risk management
- 8. Mutapa Investment Fund and all its subsidiaries will continue refraining from contracting, guaranteeing, or otherwise assuming any borrowing or debt-like obligation without the prior written approval of the Ministry of Finance, Economic Development and Investment Promotion.
  - Timing: To be assessed at each program review
  - Objective: Improve fiscal risk management
  - Status: Met (in March and June)

- 9. Publish audited IFRS-consistent financial statements of all Mutapa’s subsidiaries (excluding those under Corporate Rescue Proceedings or Administration) for 21 of Mutapa’s subsidiaries for the 12 month-period ending on 31 December 2024, and for 5 subsidiaries for the period ending on 31 December 2023.
  - Timing: End-September 2026
  - Objective: Improve fiscal risks management
  - Status: (no status line provided in the excerpt)

### Governance
- 10. Prepare and publish, in consultation with IMF staff, an anti-corruption strategy with policy matrix of responsibilities, timelines and actions (MEFP, Paragraph 39).
  - Timing: End-September 2026
  - Objective: Strengthen economic governance
  - Status: (no status line provided in the excerpt)

*Source: Attachment II. Technical Memorandum of Understanding — content excerpt from the provided IMF PDF chapter/section.*

### INTRODUCTION

### INTRODUCTION

### Institutional Definitions
- Central government: a single institutional unit consolidating all accounts whose total revenues and expenditures are authorized through the Blue Book (including line ministries, the Parliament of Zimbabwe, the Auditor General's Office, and Vote of Credit). Excludes public entities with autonomous legal personae whose own budgets are not included in the central government budget.
- General government: comprises the central government, extra-budgetary funds, social security, and local governments. The Reserve Bank of Zimbabwe (RBZ) is considered as part of the Public Financial Corporations.
- Public sector: comprises the general government and all state-owned enterprises including Mutapa Investment Fund. The nonfinancial public sector excludes the RBZ and nine other public financial corporations (including AFC, Infrastructure Development Bank of Zimbabwe (IDBZ), CBZ, People's Own Savings Bank, Women's Development Bank, ZAMCO, and the Zimbabwe ReinsuranceCorporation).
- Fiscal year: starts on January 1 and ends on December 31.

### Program Exchange Rates
- The exchange rates for the purposes of the program are specified in Table 1 below.
- Table 1. Zimbabwe: Program Exchange Rates
  (Rates as of December 31, 2025)
  - CurrencyZimbabwe Gold (ZiG) per currency unit
  - Currency units per US Dollar
  - US Dollar25.981.00
  - GB Pound34.980.74
  - Euro30.490.85
  - Rand1.5616.61
  - SDR35.610.73
  - Renminbi3.716.99
  - Source: Reserve Bank of Zimbabwe

### Quantitative Targets — Overview and Test Dates
- Test dates for assessing performance: end-March 2026, end-June 2026, and end-September 2026.
- Continuous quantitative targets remain in effect at all times during the SMP, including during any delays in completing program reviews.

### Quantitative Targets — Specifics
A. Floor on the Primary Budget Balance of the Central Government
- Definition: central government revenue minus central government expenditure (excluding interest due on public debt).
- Measurement: monitored on a cash basis, measured on the basis of Treasury data excluding transfers to the RBZ for assumed debt payments and the transfer of in-kind gold royalties to the RBZ.
- Monitoring basis: cumulative flows in USD equivalent from the beginning of the year. The ZiG component converted to USD using monthly average exchange rates.
- Adjustor: The floor will be adjusted downward-up to the cumulative cap of $300 million-by the amount of new external debt contracted by the central government to finance critical growth-enhancing projects. Large projects (above $100 million) assessed in consultation with a reputable and independent financial institution prior to signing.

- Additional adjustor: The floor will be adjusted downward, by up to a cumulative maximum of US$240million, to accommodate unbudgeted central government expenditures on the acquisition of strategic grain reserves.

B. Ceiling on Changes in Credit to the Nonfinancial Public Sector from the RBZ
- Definition: changes in the total claims of the RBZ on the nonfinancial public sector, including all loans, advances, guarantees, Treasury bills and any other obligation.
- Measurement source: Central Bank Survey, IFS S1G submission, by the sum of changes in claims on central government (code 698122A..J...{M}) excluding accruing interest on government securities, claims on state and local governments (code 69812B...J...{M}) and claims on other nonfinancial public corporations (code 69812C...J...{M}).
- Assessment: cumulative basis starting from end-December 2025, with any ZiG-denominated components valued at the program exchange rate.
- Exclusion: the ceiling excludes the recognition of deferred royalties by MoFED&IP (US$82 million).

C. Floor on the Change in Net Official International Reserves (NIR)
- Definition: difference between RBZ's liquid, convertible gross official foreign reserve assets and its short-term official foreign reserve liabilities.
- Conversion: assets and liabilities denominated in SDRs or currencies other than the U.S. dollar will be converted into U.S. dollars at the program exchange rates in Table (1). Gold valued at US$4341.2 per fine troy ounce.
- Gross official reserve assets include: (i) Zimbabwe's SDR holdings; (ii) unencumbered and readily marketable monetary gold; (iii) balances with foreign banks; (iv) foreign treasury bills, securities, investments in convertible foreign currencies, and convertible foreign currency held by RBZ; and (v) Zimbabwe's reserve position in the Fund. Pledged or encumbered assets excluded.
- Short-term official reserve liabilities: short-term foreign currency liabilities to non-residents with original maturity of one year or less. Long-term foreign liabilities, including SDR allocations, excluded.
- Assessment: cumulative change in NIR from end-December 2025 to each test date (end-March 2026, end-June 2026, and end-September 2026). Change excludes, per agreed FX cash flow template, changes in foreign currency required reserves held for domestic banks and other encumbered FX deposits consisting of non-royalty-related government deposits, Fidelity Gold Refinery (FGR) deposits, and banks’ excess reserves.

D. Ceiling on Contracting and Guaranteeing of New External Non-Concessional Borrowing
- Scope: contracting or guaranteeing new external debt by the central government to non-residents with original maturity of one year or more.
- Debt definition: per paragraph 8(a) of the Guidelines on Public Debt Conditionality in Fund Arrangements (Executive Board Decision No. 16919-(20/103), adopted October 28, 2020) — see Annex I.
- Conversion: debt denominated in currencies other than the U.S. dollar will be converted into U.S. dollars at program exchange rates.
- Assessment period: continuous basis starting from the date of program approval (March 27, 2026).
- Concessionality rule: debt is concessional if it includes a grant element of at least 35 percent. Grant element calculation: difference between the present value (PV) of debt and its nominal value, expressed as a percentage of nominal value. Discount rate: unified discount rate of 5 percent set forth in Executive Board Decision No. 15248-(13/97).
- Variable-rate debt PV: calculated using a program reference rate plus the fixed spread. Program reference rates: six-month USD SOFR = 2.73 percent; six-month EURIBOR = 2.00 percent; these remain fixed for the duration of the program. If linked to other benchmarks, a spread reflecting the difference between the benchmark and six-month USD SOFR will be added.
- Non-debt forms of financing (equity, joint ventures): require (i) approval by relevant oversight committee (e.g., PPP Committee), (ii) feasibility assessment by a reputable international firm, and (iii) ring-fencing of revenue cashflows in an escrow account covering any debt servicing (with up to 1.5 times in debt service coverage).
- Exclusions from ceiling: new external debt to finance clearance of external arrears to international financial institutions (African Development Bank, European Investment Bank, and the World Bank); and planned BADEA loan (US$ 42 million, with a grant element of 23 percent) included in the 2026 National Budget borrowing plan.
- Adjustor: ceiling adjusted upward-up to the cumulative cap of $300 million-by the amount of new external debt contracted by the central government to finance critical growth-enhancing projects. Large projects (above $100 million) will be assessed in consultation with a reputable and independent financial institution prior to signing.

E. Ceiling on Changes in ZiG Monetary Base of the RBZ
- Target applies to cumulative changes in the ZiG component of the monetary base measured from the Central Bank Survey (IFS S1G submission), defined as difference between the stock at the end of the quarter under review and the stock at end-December 2025.
- Monetary base defined as sum of quasi-currency instruments (bond notes and coins) in circulation, ZiG liabilities of the RBZ to depository and non-depository corporations including required reserves (codes 69814CRN.R...{Z} and 69814CTN.R...{Z}), transferable deposits (code 69814CSN.R...{Z}), other deposits (code 69814CUN.R...{Z}), and securities other than shares (code 69814CWN.R...{Z}), as presented in the Central Bank Survey.

### Indicative Targets (F–L)
F. Floor on Central Government Revenue Collection
- Definition: in accordance with the Government Finance Statistics Manual (GFSM 2001) including in-kind royalties transferred to the RBZ for FX reserves accumulation.
- Measurement: Treasury data as provided by the Accountant General; monitored as cumulative flows in USD equivalent from the beginning of the year. ZiG component converted using period average monthly exchange rate.

G. Ceiling on the Accumulation of New Domestic Expenditure Arrears
- Scope: overdue domestic payment obligations of the central government incurred by the following ministries and agencies only: Ministry of Lands, Agriculture, Fisheries, Water and Rural Development (MLAFWRD); Ministry of Finance, Economic Development and Investment Promotion (MoFED&IP); and Ministry of Transport and Infrastructural Development (MoTID), whether verified or not, owed to entities legally incorporated in Zimbabwe and residents of Zimbabwe.
- Included obligations: domestic service providers, agricultural input suppliers, domestic private sector contractors. Excludes government liabilities to other public sector units.
- When payments are deemed in arrears:
  - Debt unpaid for more than 30 days after due date in agreement.
  - Wages or pensions unpaid 90 days after due date.
  - Payments for goods and services received more than 90 days after processing supporting documents.
- Net arrears: difference between US-dollar value of new arrears incurred during the year by the listed ministries and US-dollar value of payments made toward previously accumulated domestic arrears of those same ministries. Non-US dollar components converted at program exchange rate.
- Reporting: data limited to the three ministries; quarterly reporting based on agreed template consolidated for the MDAs of the listed three ministries.

H. Ceiling on Central Government Employment Costs
- Measurement: cash basis as sum of civil service wages and salaries; transfers to grant-aided institutions, public service pension fund, National Social Security Authority (NSSA), Premier Service Medical and society (PSMAS); funeral expenses; and benefits in kind (Condition of Service Fuel, airtime and data).
- Monitoring: cumulative flows in USD from the beginning of the year. ZiG component converted to USD using average monthly exchange rates.

I. Floor on Protected Social and Priority Spending
- Protected social spending (cash basis) comprises central government spending on:
  - Education: Recurrent spending on teaching and learning materials; spending on the school feeding program; expenditures on the Student Stipend Support portion of the National Education and Training Fund.
  - Health: Recurrent spending on preventative health programmes; medicines and medical supplies; co-financing of all Development Partner supported programmes ( GAVI, Global Fund); current expenditures for government hospitals and health centres; grant aided institutions Parirenyatwa/Mission Hospitals/Local authorities; and recurrent expenditures on maternal and child health.
  - Program schemes: (1) Presidential Input Scheme; (2) Basic Education Assistance Module (BEAM); (3) Food Deficit Mitigation; (4) Harmonized Cash Transfers; and (5) Social Protection Management Information System.
- Monitoring: cumulative flows in USD from the beginning of the year. ZiG component converted to USD using average monthly exchange rates.

J. Ceiling on Changes in Domestic Debt
- Definition: change in the stock of contracted or guaranteed debt to residents. Excludes obligations to former farm owners.
- Exclusions from definition of changes: (i) government securities issued for the compensation of former farm owners and (ii) accumulation of additional domestic arrears to service providers and mining companies.
- Assessment: cumulative basis starting from end-December 2025, valued at the program exchange rate.

K. Ceiling on Central Government Gold Incentives
- Definition: Treasury-financed payments under the government’s gold incentive policy framework introduced in 2021. Eligible beneficiaries: artisanal and small-scale miners and licensed Gold Buying Agents meeting prescribed monthly delivery thresholds.
- Process: Fidelity Gold Refinery (FGR) submits monthly schedules to MoFED&IP identifying eligible beneficiaries, verified deliveries, and corresponding incentive amounts. Treasury pays eligible beneficiaries based on these schedules following verification and approval procedures.
- Monitoring: cash basis as cumulative payments in USD from the beginning of the year, based on Treasury payment records.

L. Floor on Central Government Deposits
- Definition: stock of all deposits held by the central government with the central bank and commercial banks, including main treasury accounts, line ministry sub-accounts, and any extrabudgetary accounts managed by the central government.
- Assessment: changes assessed based on opening and closing balances of central government bank accounts, on Treasury data provided by the Accountant General.
- Measurement period: cumulative change in the USD equivalent from end-June 2026, with non-USD FX and ZiG-denominated balances valued at the end-period exchange rate at each test date.
- Adjustors:
  - Upward (downward) adjustment by the excess (shortfall) in central government revenue relative to the revenue indicative target, measured cumulatively from end-June 2026; applies one-for-one to deviations.
  - Downward adjustment, by up to a cumulative maximum of US$240million, to accommodate unbudgeted central government expenditures on acquisition of strategic grain reserves.

M. Other Definitions (for structural benchmarks)
- Foreign exchange parallel market rate: retail transaction rate prevailing outside official interbank market, including rates used by major retailers, wholesalers for cash sales, and foreign exchange bureaus.
- Foreign exchange uncovered demand (FX uncovered demand or foreign exchange pipeline): stock of verified but unsettled foreign-exchange purchase requests from authorized dealers awaiting settlement through the WBWS market.
- Early redemptions and other liability-management operations: any transaction, instruction, approval, payment, settlement, switch, exchange, discretionary rollover, buyback, prepayment, restructuring, substitution, or operation with similar economic effect that alters the contractual cash-flow profile of an outstanding central government debt instrument before its original contractual maturity, redemption date, or payment date.
  - Covered instruments include Treasury bills, Treasury bonds, blocked-fund instruments, securities issued to settle assumed RBZ liabilities, and any other claim recorded as central government debt.
  - Operations with similar economic effect include cash settlements, discounted settlements, exchanges into new instruments, set-offs, netting arrangements, substitutions of instruments or holders, and other arrangements changing timing, amount, holder, or form of payment before original contractual terms.
  - Regular payments on original contractual due date and regular refinancing at or after contractual maturity at market terms do not constitute early redemptions or liability-management operations but will be reported in the monthly Treasury securities report.

### Data Reporting
- Government will prepare and forward electronically information in accordance with the agreed reporting framework contained in Table 2.
- Selected reporting highlights (reporting institution — frequency — submission lag):
  - RBZ — Monthly — 2 weeks: Balance sheet and income statement of the RBZ, including detailed items of NFA, NDA and RBZ’s other liabilities to ODCs.
  - RBZ — Weekly — 1 week: NIR, NFA, CBS 1/RBZ and ZiG and USD RTGS balances.
  - RBZ — Monthly — 1 month: RBZ FX cash flow using the agreed template, including inflows from royalties and inflows/outflows to service RBZ’s debt assumed by the government.
  - RBZ/ZIMSTAT — Quarterly — 3 months: Balance of payments (incl. revised outturn for previous quarters).
  - MoFED&IP — Monthly — 6 weeks: Central government operations– revenue, expenditure, gold incentive subsidies, and financing, in USD and in ZiG; detailed data on budget execution; stock of domestic debt details.
  - MoFED&IP and RBZ — Quarterly — Quarterly: Update on the status of implementation of the quantitative targets and structural benchmarks specified in Table 2-3 of the MEFP (submission lag: 4 weeks).
- Full data reporting matrix includes monetary and financial sector, external sector, external debt, fiscal sector, Mutapa Investment Fund reporting, real sector, and structural benchmarks with specified frequencies and submission lags.

### Attachment II — Annex I. Public Debt Definition (key points)
- Definition of debt for program purposes: as set out in paragraph 8(a) of the Guidelines on Public Debt Conditionality in Fund Arrangements (Executive Board Decision No. 16919-(20/103), adopted October 28, 2020).
- "Debt" understood as a current (not contingent) liability created under a contractual arrangement through provision of value in the form of financial and nonfinancial assets (including currency) or services, requiring the obligor to make one or more payments of assets or services at future date(s).
- Forms of debt include:
  - Loans (advances of money, including deposits, bonds, debentures, commercial loans, buyers' credits, repurchase agreements, official swap arrangements).
  - Suppliers' credits (supplier permits deferment of payments after delivery).
  - Leases (debt equals present value at inception of all lease payments expected during the agreement excluding payments covering operation, repair, or maintenance).
- Under this definition, arrears, penalties, and judicially awarded damages arising from failure to make payment under contractual obligation that constitutes debt are debt. Failure to make payment on an obligation not considered debt under this definition (e.g., payment on delivery) will not give rise to debt.

*Source: INTRODUCTION (1zweea2026002) — IMF staff memorandum on Staff-Monitored Program definitions, quantitative targets, structural benchmarks, and reporting requirements.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2026/english/1zweea2026002.pdf_