{
  "title": "Press Release: IMF Executive Board Concludes 2016 Article IV Consultation with Zimbabwe and Third Review Under the Staff Monitored Program",
  "publication": "IMF News, May 4, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr16194",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr16194",
  "overlayPath": "/en/news/articles/2015/09/14/01/49/pr16194/index.md",
  "summary": "On May 2, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Zimbabwe.",
  "publishDate": "2016-05-04",
  "sections": [
    {
      "heading": "Recent economic developments",
      "content": "- On May 2, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Zimbabwe.\n- Zimbabwe’s economic difficulties have deepened due to:\n  - Drought, erratic rains, and increasing temperatures, which have reduced agricultural output and disrupted hydropower production and water supplies.\n  - Tight liquidity conditions resulting from limited external inflows and lower commodity prices.\n  - Inflation remaining in negative territory because of the appreciating U.S. dollar—the country’s main currency—and lower commodity prices.\n- Zimbabwe remains in debt distress and the level of international reserves is low.\n- Despite the adverse environment, authorities:\n  - Reduced the fiscal deficit in both 2014 and 2015.\n  - Started to rationalize public expenditures by implementing recommendations from the 2015 civil service audit.\n  - Are amending the Public Financial Management and Procurement Acts.\n  - The Reserve Bank of Zimbabwe has taken measures to restore confidence in the financial sector; all banks in operations now have capital buffers above the minimum requirements.\n- The authorities met their commitments under the Staff Monitored Program (SMP) that ended at end-December 2015.\n  - The SMP focused on implementing a limited number of key reforms to show capacity for reforms required for a Fund-supported program.\n  - The SMP has been a useful anchor in a difficult macroeconomic and political environment."
    },
    {
      "heading": "Macroeconomic outlook and risks",
      "content": "- Without bold reforms, economic difficulties will continue in the medium term.\n- Given the outlook for the global economy, growth is projected to remain below levels needed to ensure sustainable development and poverty reduction.\n- The current account deficit is expected to narrow but remain high over the medium term, financed mainly by loans to the private sector.\n- Risks to the outlook:\n  - Prolonged adverse weather conditions.\n  - Weak commodity prices.\n  - Policy implementation in a difficult political environment.\n- Policy implementation priorities to reduce risks:\n  - Timely implementation of measures to curb the wage bill.\n  - Continued progress in State-Owned Enterprise (SOE) reforms to lower employment costs."
    },
    {
      "heading": "Authorities’ intended reforms and reengagement strategy",
      "content": "- The authorities are pursuing a gradual, step-by-step approach to reengaging with the international community.\n- Clearing arrears to the International Financial Institutions (IFIs) is seen as a first step.\n- In October 2015 the authorities presented a strategy to clear their external arrears to the IFIs and reform plans to creditors and development partners; these received broad support.\n- Once implemented, the strategy and reform plans should provide positive signals to investors and creditors and help unlock external flows to finance development plans and private sector-led growth.\n- Going forward, the authorities intend to:\n  - Reduce the size of the wage bill to re-orient spending towards priority capital and social outlays.\n  - Improve debt management, develop a comprehensive public financial management strategy, and strengthen VAT policy and key processes in revenue administration.\n  - Improve the business environment, including by a transparent and consistent application of their indigenization policy and a new comprehensive land reform program, which would include a framework for land compensation."
    },
    {
      "heading": "Executive Board Assessment and recommendations",
      "content": "- Directors commended the authorities for successful implementation of economic policies under the SMP despite difficult circumstances.\n- Directors noted adverse weather and lower commodity prices have taken a heavy toll on economic activity and social well-being.\n- Key Director recommendations and emphases:\n  - Maintain fiscal prudence and press ahead with ambitious structural reforms to address impediments to investment, foster private sector-led growth, and reduce poverty, using the Fund’s targeted technical assistance.\n  - Further progress on reforms and clearance of external arrears will pave the way for full re-engagement with the international community and regain access to external financing, particularly from the Fund.\n  - A step-up to a comprehensive and deep economic policy adjustment agenda is critical.\n  - Achieving a sustainable fiscal position requires a significant reduction in the wage bill while rebalancing the budget toward infrastructure investment and social outlays to stimulate growth.\n  - Given the relatively high tax-to-GDP ratio, focus on base-broadening, increasing non-tax revenue from mineral resources, improving the efficiency of VAT collections, and enhancing tax administration.\n  - Accelerate SOE reform, strengthen public financial management, and enhance transparency in the mining sector.\n  - Continue to strengthen bank supervision and risk management, facilitate financial deepening, and promote financial inclusion.\n  - Implement the indigenization policy in a business-friendly and transparent manner and resolve outstanding land issues swiftly.\n  - Tackle corruption and promote economic diversification.\n  - Pursue a strong debt management strategy, including limiting non-concessional borrowing to critical growth-enhancing and poverty-reducing projects.\n  - Clear all arrears to the Poverty Reduction and Growth Trust (PRGT) and other IFIs; once arrears to the PRGT are cleared, remedial measures against Zimbabwe can be removed, including reinstatement to the list of PRGT-eligible countries."
    },
    {
      "heading": "Selected economic indicators (2012–15)",
      "content": "- Real GDP Growth (annual percentage change)\n  - 2012: 10.6\n  - 2013: 4.5\n  - 2014: 3.8\n  - 2015 Est.: 1.1\n- Nominal GDP (US$ millions)\n  - 2012: 12,472\n  - 2013: 13,490\n  - 2014: 14,197\n  - 2015 Est.: 14,680\n- GDP deflator (annual percentage change)\n  - 2012: 3.0\n  - 2013: 3.5\n  - 2014: 1.3\n  - 2015 Est.: 2.3\n- Inflation (annual percentage change)\n  - Consumer price index (annual average)\n    - 2012: 3.7\n    - 2013: 1.6\n    - 2014: -0.2\n    - 2015 Est.: -2.4\n  - Consumer price index (end-of-period)\n    - 2012: 2.9\n    - 2013: 0.3\n    - 2014: -0.8\n    - 2015 Est.: -2.5\n- Central government (percent of GDP)\n  - Revenue and grants\n    - 2012: 28.0\n    - 2013: 27.7\n    - 2014: 26.6\n    - 2015 Est.: 25.5\n  - Expenditure and net lending\n    - 2012: 29.2\n    - 2013: 30.1\n    - 2014: 28.3\n    - 2015 Est.: 26.5\n  - Overall balance (commitment basis)\n    - 2012: -1.2\n    - 2013: -1.8\n    - 2014: -1.1\n- Money and credit (US$ millions)\n  - Broad money (M3)\n    - 2012: 3,719\n    - 2013: 3,888\n    - 2014: 4,377\n    - 2015 Est.: 4,736\n  - Net foreign assets\n    - 2012: -401\n    - 2013: -755\n    - 2014: -717\n    - 2015 Est.: -676\n  - Net domestic assets\n    - 2012: 4,120\n    - 2013: 4,643\n    - 2014: 5,094\n    - 2015 Est.: 5,412\n  - Reserve money\n    - 2012: 273\n    - 2013: 272\n    - 2014: 464\n    - 2015 Est.: 563\n- Money and credit (annual percentage change)\n  - Domestic credit (net)\n    - 2012: 91.6\n    - 2013: 6.2\n    - 2014: 4.2\n    - 2015 Est.: 15.5\n  - Of which: credit to the private sector\n    - 2012: 27.1\n    - 2013: 4.7\n- Balance of payments (US$ millions)\n  - Current account balance\n    - 2012: -1,818\n    - 2013: -2,461\n    - 2014: -2,157\n    - 2015 Est.: -1,506\n  - (percent of GDP)\n    - 2012: -14.6\n    - 2013: -18.2\n    - 2014: -15.2\n    - 2015 Est.: -10.3\n- Official reserves (end-of-period)\n  - Gross international reserves (US$ millions)\n    - 2012: 398\n    - 2013: 284\n    - 2014: 303\n    - 2015 Est.: 340\n  - (months of imports of goods and services)\n    - 2012: 0.6\n    - 2013: 0.4\n    - 2014: 0.5\n    - 2015 Est.: 0.5\n- Debt (end-of-period)\n  - PPG external debt (US$ millions)\n    - 2012: 6,655\n    - 2013: 7,015\n    - 2014: 6,979\n    - 2015 Est.: 7,313\n  - (percent of GDP)\n    - 2012: 53.4\n    - 2013: 52.0\n    - 2014: 49.2\n    - 2015 Est.: 49.8\n\nSource: IMF Press Release No. 16/194, May 4, 2016.\n\n---\n\n\n References\n\n- Zimbabwe and the IMF\n- Press Releases\n- Staff Report\n- PRESS CENTER\n- http://www.imf.org/external/country/zwe/index.htm\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr16194"
    }
  ],
  "bullets": [
    "[Markdown version](/en/news/articles/2015/09/14/01/49/pr16194/index.md)",
    "[Structured JSON version](/en/news/articles/2015/09/14/01/49/pr16194/index.json)",
    "[Bundle manifest](/en/news/articles/2015/09/14/01/49/pr16194/bundle-manifest.json)",
    "Published: May 4, 2016",
    "On May 2, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Zimbabwe.",
    "Zimbabwe’s economic difficulties have deepened due to:",
    "Zimbabwe remains in debt distress and the level of international reserves is low.",
    "Despite the adverse environment, authorities:",
    "The authorities met their commitments under the Staff Monitored Program (SMP) that ended at end-December 2015.",
    "Without bold reforms, economic difficulties will continue in the medium term.",
    "Given the outlook for the global economy, growth is projected to remain below levels needed to ensure sustainable development and poverty reduction.",
    "The current account deficit is expected to narrow but remain high over the medium term, financed mainly by loans to the private sector.",
    "Risks to the outlook:",
    "Policy implementation priorities to reduce risks:",
    "The authorities are pursuing a gradual, step-by-step approach to reengaging with the international community.",
    "Clearing arrears to the International Financial Institutions (IFIs) is seen as a first step.",
    "In October 2015 the authorities presented a strategy to clear their external arrears to the IFIs and reform plans to creditors and development partners; these received broad support.",
    "Once implemented, the strategy and reform plans should provide positive signals to investors and creditors and help unlock external flows to finance development plans and private sector-led growth.",
    "Going forward, the authorities intend to:",
    "Directors commended the authorities for successful implementation of economic policies under the SMP despite difficult circumstances.",
    "Directors noted adverse weather and lower commodity prices have taken a heavy toll on economic activity and social well-being.",
    "Key Director recommendations and emphases:",
    "Real GDP Growth (annual percentage change)",
    "Nominal GDP (US$ millions)",
    "GDP deflator (annual percentage change)",
    "Inflation (annual percentage change)",
    "Central government (percent of GDP)",
    "Money and credit (US$ millions)",
    "Money and credit (annual percentage change)",
    "Balance of payments (US$ millions)",
    "Official reserves (end-of-period)",
    "Debt (end-of-period)",
    "[Zimbabwe and the IMF](http://www.imf.org/external/country/ZWE/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[Staff Report](https://www.imf.org/external/pubs/cat/longres.aspx?sk=43882.0)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/country/zwe/index.htm](https://www.imf.org/external/country/zwe/index.htm)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
  "alternates": {
    "markdown": "/en/news/articles/2015/09/14/01/49/pr16194/index.md",
    "json": "/en/news/articles/2015/09/14/01/49/pr16194/index.json",
    "bundleManifest": "/en/news/articles/2015/09/14/01/49/pr16194/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-26T22:10:08.272Z"
}