IMF Executive Board Concludes 2025 Article IV Consultation with Zimbabwe

IMF News, October 2, 2025

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Zimbabwe is experiencing a degree of macroeconomic stability due to monetary policy tightening.
Growth recovered in the first half of 2025 after a sharp slowdown from 5 percent in 2023 to 1.7 percent in 2024 driven by a severe drought, lower agricultural and hydro‑power electricity production, and declining prices for key metal exports.
Recovery drivers in H1 2025: better climate conditions, record-high gold prices, and sustained workers’ remittances inflows.
Net external financing turned negative by 2024 and SDR allocation channeled for budget financing had been fully utilized.
Nearly US$600 million of domestic expenditure arrears accumulated in 2024.
ZiG monetary base increased by around 215 percent between the introduction of the ZiG in April 2024 and September 2024.
ZiG monthly inflation fell to 0.3 percent in June 2025 after monetary tightening and stabilization of exchange rates.

Revenue ratio increased sharply between 2023 and 2024 through: reduction in VAT tax reliefs; taxation of the public sector employees allowance introduced during the pandemic; increased fees and levies; steps to reduce smuggling.
Spending pressures increased from higher public sector wages, capital outlays, servicing of debt taken over by the Treasury from the RBZ, and debt related to acquisition of assets for the Mutapa Investment Fund.
Fiscal deficit remained broadly stable between 2023 and 2024, but reduced financing led to the accumulation of nearly US$600 million of domestic arrears in 2024.
Deficit financing relied on T‑bills issuance and direct borrowing from the RBZ’s overdraft facility, contributing to expansion of domestic liquidity.

Following an end‑September 2024 drop in the value of the ZiG, the RBZ halted monetary financing for Treasury debt servicing, increased statutory reserve requirements for both ZiG and FX demand deposits, and raised the policy rate.
The premium between the Willing‑Buyer‑Willing‑Seller (WBWS) and the parallel exchange rates has narrowed.
ZiG monetary base growth slowed to around 30 percent from October 2024 to April 2025; WBWS and parallel market exchange rates largely stabilized.
Directors recommended reducing the Reserve Bank of Zimbabwe’s FX market footprint by gradually redirecting surrender requirements into the market and eliminating exchange restrictions for current account transactions and CFMs as conditions allow, improving monetary control through market‑based instruments, encouraging ZiG demand, and increasing clarity on the mono‑currency transitional plan.
Progress toward strengthening financial sector oversight welcomed; further steps encouraged to implement Basel III capital standard and strengthen regulatory and supervisory practices.

Growth is expected to rebound to 6 percent in 2025, driven by a good agricultural season, record-high gold prices, and sustained remittance inflows.
Growth is expected to slow to about 3.5 percent over the medium term as market confidence in the durability of macroeconomic stabilization remains low and fiscal financing needs crowd out private sector growth.
Inflation is expected to remain low, driven by tight monetary policy.
Significant downside risks persist, notably from a return to monetary financing.
Foreign reserve buffers remain low despite recurring current account surpluses.

Zimbabwe continues reengagement with international creditors under the Structured Dialogue Platform (SDP), focused on: (i) economic reforms; (ii) political‑governance reforms; and (iii) farmers’ compensation and land tenure reforms.
A stronger policy reform track record, supported by an SMP, could help reengagement efforts and access to concessional external financing.
Directors emphasized strengthening public financial management and the governance framework for the Mutapa Investment Fund to help control fiscal risks.
Directors welcomed recent progress on AML/CFT reforms and noted an acceleration of these and other governance reforms is critical to reduce vulnerabilities and sustain medium‑term growth.

Directors welcomed recent tightening of policies, notably halting quasi‑fiscal operations and monetary financing, which have helped reduce inflation and achieve some macroeconomic stability.
Key challenges noted: fiscal financing pressures and accumulation of domestic arrears; limited access to official external financing; low reserve buffers; low domestic currency (ZiG) monetization; persistent gap between official and parallel exchange rates; structural gaps; governance vulnerabilities.
Recommended policy actions:
- Implement a tighter fiscal stance to close the fiscal financing gap, prevent further accumulation of domestic arrears, and preclude a return to monetary financing.
- Adjustment should include both revenue and spending measures: rationalize tax incentives; address tax administration weaknesses; reduce spending—particularly the public compensation bill—while protecting targeted social spending and public investment.
- Strengthen public financial management.
- Strengthen the monetary and FX frameworks to increase policy effectiveness and credibility.
- Continue and accelerate governance and AML/CFT reforms.
Directors noted that progress on reforms would support debt sustainability and arrears clearance under the SDP.

Real GDP growth: 6.1 (2022), 5.3 (2023), 1.7 (2024), 6.0 (2025), 4.6 (2026), 3.6 (2027), 3.5 (2028).
Nominal GDP (US$ millions): 48,570 (2022); 44,447 (2023); 45,719 (2024); 49,584 (2025); 51,560 (2026); 53,441 (2027); 55,308 (2028); 57,218 (2029); 59,237 (2030).
CPI (annual average): 193.4 (2022); 667.4 (2023); 736.1 (2024); 89.0 (2025); 18.2 (2026).
Money Base (annual percent change): 300.2 (2022); 1,842.7 (2023); 2421.3 (2024); 29.0 (2025); 31.4 (2026); 20.9 (2027).
Gross international reserves (US$ millions): 597 (2022); 110 (2023); 484 (2024); 800 (2025); 1,144 (2026); 1,508 (2027); 1,933 (2028); 2,430 (2029); 2,938 (2030).
Consolidated public sector debt (US$ millions): 18,016 (2022); 21,077 (2023); 23,278 (2024); 23,665 (2025); 23,893 (2026); 24,126 (2027); 24,368 (2028); 24,616 (2029); 24,870 (2030).
Public and publicly guaranteed external debt (US$ millions): 16,327 (2022); 16,538 (2023); 16,745 (2024); 16,788 (2025); 16,739 (2026); 16,676 (2027); 16,629 (2028); 16,614 (2029); 16,585 (2030).
Of which: Arrears (US$ millions): 10,471 (2022); 10,770 (2023); 11,909 (2024); 12,506 (2025); 12,976 (2026); 13,457 (2027); 13,894 (2028); 14,268 (2029); 14,616 (2030).

IMF Executive Board Concludes 2025 Article IV Consultation with Zimbabwe — October 2, 2025