Zimbabwe: 2019 Article IV Consultation — Press Release; Staff Report; and Statement by the Executive Director for Zimbabwe
IMF Staff Country Reports, March 26, 2020
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- Zimbabwe: 2019 Article IV Consultation — Press Release; Staff Report; and Statement by the Executive Director for Zimbabwe
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Bibliographic details
- Published: March 26, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513537726.002
Overview
- The 2019 Article IV Consultation assesses Zimbabwe’s near- and medium-term challenges and policy priorities.
- The report was prepared before COVID-19 became a global pandemic and therefore does not reflect the implications of the pandemic or related policy priorities.
- The outbreak has greatly amplified uncertainty and downside risks around the outlook; IMF staff are monitoring developments and assessing impacts and policy responses.
Economic outlook and risks
- With another poor harvest expected, growth in 2020 is projected at near zero, following a sharp contraction in 2019, with food shortages continuing.
- No progress has been made on clearing longstanding external arrears, increasing vulnerability to external shocks.
- The outbreak of COVID-19 has resulted in unprecedented strains in global trade, commodity, and financial markets, amplifying downside risks to Zimbabwe’s outlook.
Macroeconomic imbalances and policy trade-offs
- Authorities face a difficult balance between:
- Pursuing tight monetary policy to reduce very high inflation, and
- Pursuing tight fiscal policy to address macroeconomic imbalances and build confidence in the currency,
- While averting a crisis.
- Pressures are mounting to increase spending on wages and for social protection to mitigate the impact of weather shocks and high inflation.
- The 2020 budget includes a significant increase in social spending, but it is likely insufficient to meet pressing needs.
Key policy implications and priorities (as presented)
- Restore confidence in the currency through appropriate monetary and fiscal consolidation.
- Address macroeconomic imbalances while managing liquidity and inflation pressures.
- Mobilize resources and prioritize social protection and wages to mitigate immediate humanitarian and economic impacts from poor harvests and high inflation.
- Resolve longstanding external arrears to reduce vulnerability to external shocks and improve access to external financing.
International Monetary Fund. Zimbabwe: 2019 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Zimbabwe.
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