## IMF Staff Completes 2017 Article IV Visit to Zimbabwe

_IMF News, May 15, 2017_

## Source details

**Canonical URL:** [IMF Staff Completes 2017 Article IV Visit to Zimbabwe](https://www.imf.org/en/news/articles/2017/05/15/pr17172-imf-staff-completes-2017-article-iv-visit-to-zimbabwe)

## Other formats

- [Markdown version](/en/news/articles/2017/05/15/pr17172-imf-staff-completes-2017-article-iv-visit-to-zimbabwe/index.md)
- [Structured JSON version](/en/news/articles/2017/05/15/pr17172-imf-staff-completes-2017-article-iv-visit-to-zimbabwe/index.json)
- [Bundle manifest](/en/news/articles/2017/05/15/pr17172-imf-staff-completes-2017-article-iv-visit-to-zimbabwe/bundle-manifest.json)

## Bibliographic details
- Published: May 15, 2017

---

### Mission overview
- Press Release No. 17/172
- Date: May 15, 2017
- IMF team led by Ana Lucía Coronel visited Zimbabwe from May 2 to 13, 2017 to conduct 2017 Article IV Consultations.
- Purpose: discussions with national authorities, private sector representatives, and civil society on recent economic developments, outlook and risks, and policies to restore economic stability.
- Media relations: PRESS OFFICER: Lucie Mboto Fouda; Phone: +1 202 623-7100; Email: MEDIA@IMF.org
- The Executive Board of the IMF is expected to consider the staff report for Zimbabwe’s 2017 Article IV Consultations in early July.

### Macroeconomic situation and outlook
- The economy is facing difficulties due to:
  - A severe drought.
  - Slow reform momentum.
- These developments have led to high expenditure levels since late 2015, despite subdued revenues.
- A difficult external environment is limiting access to foreign inflows.
- Large fiscal imbalances are being financed by domestic borrowing.
- The expansionary fiscal stance combined with curtailed net capital flows has resulted in cash shortages that are hampering economic activities.
- The recovery in agriculture and mining will drive growth in 2017, but maintaining momentum requires fiscal consolidation.

### Key constraints and risks
- Excessive government spending could:
  - Exacerbate cash scarcity.
  - Further jeopardize the health of the external and financial sectors.
  - Ultimately fuel inflation.
- Spending pressures stem from:
  - High employment costs.
  - Government transfers to support specific economic sectors.
  - Elevated discretionary expenditure.
- Central bank financing of the deficit and issuance of debt and quasi-currency instruments pose risks to restoring confidence and attracting dollar inflows.
- The financial sector is not fully intermediating resources to productive credit and is instead financing fiscal operations.

### Policy recommendations (staff advice)
- Fiscal consolidation:
  - Expedite plans to reduce the deficit to a sustainable level.
  - Refrain from central bank financing of the deficit.
  - Contain issuance of debt and quasi-currency instruments.
- Public expenditure management:
  - Reduce the wage bill by reviewing allowances and benefits and evaluating the size of the civil service with a view to eliminating non-essential posts.
  - Redesign government interventions to support agriculture to maximize production benefits while minimizing risks to the public-sector balance sheet.
  - Reinforce efforts to curtail non-priority spending while safeguarding social outlays.
- Financial sector and external confidence:
  - Restore the financial sector’s role of intermediating resources by channeling deposits to productive credit rather than financing fiscal operations.
  - Restore confidence to attract necessary dollar inflows.
- Private sector and governance reforms:
  - Take actions to unleash the potential of the private sector and ensure growth benefits the most vulnerable.
  - Demonstrate that Zimbabwe is open for business by:
    - Enhancing efforts to tackle corruption.
    - Encouraging private sector investment.
    - Allowing the market to determine prices.
    - Promoting labor flexibility.
    - Creating a stable legal and regulatory framework to reduce policy uncertainty.
  - Enhance domestic revenue mobilization.
  - Boost transparency in the mining sector.
  - Improve governance in public enterprises to strengthen the fiscal position.

### IMF engagement and next steps
- The team stands ready to continue working with the Zimbabwean authorities to address policy challenges.
- Based on the mission’s preliminary findings, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

*IMF Communications Department — End-of-Mission press release (May 15, 2017).*

---


## References

- [Zimbabwe and the IMF](http://www.imf.org/external/country/ZWE/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/05/15/pr17172-imf-staff-completes-2017-article-iv-visit-to-zimbabwe_