IMF Staff Concludes Virtual Staff Visit to Zimbabwe

IMF News, June 16, 2021

Source details

Mission led by Dhaneshwar Ghura.
Virtual staff visit with the Zimbabwe authorities during June 1–15, 2021.
Purpose: discuss recent economic developments and the economic outlook.
Outcome: end-of-mission statement conveying preliminary findings; this mission will not result in a Board discussion.
IMF Communications contact: PRESS OFFICER: Lucie Mboto Fouda; Phone: +1 202 623-7100; Email: MEDIA@IMF.org.

Real GDP contracted by 4 percent in 2020, after a 6 percent decline in 2019.
An economic recovery is underway in 2021, with real GDP expected to grow by about 6 percent, reflecting:
- a bumper agricultural output,
- increased energy production,
- the resumption of greater manufacturing and construction activities.
Risks and uncertainties highlighted:
- pandemic evolution,
- the pace of vaccination,
- implementation of sustainable policies.
Other shocks noted prior to and during the pandemic:
- cyclone Idai in 2019,
- a protracted drought,
- weak policy buffers.

Mission notes authorities’ efforts to stabilize the local currency and lower inflation.
Policy measures cited as "in the right direction":
- contained budget deficits,
- reserve money growth control,
- introduction of a foreign exchange auction system.
Near-term macroeconomic imperative:
- improve coordination among fiscal, foreign exchange and monetary policies,
- address COVID-19 related economic and humanitarian challenges.

Structural reforms emphasized as essential to ensure sustained and inclusive growth:
- improve the business climate,
- reduce governance vulnerabilities.
Recommendation: fully operationalize and implement the authorities’ strategy and policies as embodied in their National Development Strategy.
Expected outcome: durable macroeconomic stability and structural reforms would bode well for the recovery and Zimbabwe’s development objectives.

Zimbabwe has been a Fund member in good standing since it cleared its outstanding arrears to the IMF in late 2016.
IMF provides extensive technical assistance in:
- economic governance,
- financial sector reforms,
- macroeconomic statistics.
IMF is precluded from providing financial support to Zimbabwe due to:
- an unsustainable debt and official external arrears.
Conditions for a Fund financial arrangement would require:
- a clear path to comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears and obtaining financing assurances from official creditors;
- a reform plan that is consistent with macroeconomic stability, growth and poverty reduction;
- a reinforcement of the social safety net;
- governance and transparency reforms.

The virtual IMF mission staff visit outcome will serve as a key input in preparations for the 2021 Article IV consultation mission expected to take place later this year.
IMF staff held meetings with:
- Minister Mthuli Ncube,
- Reserve Bank of Zimbabwe Governor John Mangudya,
- other senior government and RBZ officials,
- representatives of the private sector and Zimbabwe’s development partners.
IMF staff expressed gratitude to the Zimbabwean authorities and stakeholders for the constructive and open spirit in which all discussions were held.

IMF Press Release No. 21/183 — "IMF Staff Concludes Virtual Staff Visit to Zimbabwe", June 16, 2021.