{
  "title": "IMF Executive Board Concludes 2022 Article IV Consultation with Zimbabwe",
  "publication": "IMF News, March 24, 2022",
  "sourceUrl": "https://www.imf.org/en/news/articles/2022/03/24/pr2288-zimbabwe-imf-executive-board-concludes-2022-article-iv-consultation",
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  "summary": "Zimbabwe experienced severe exogenous shocks (cyclone Idai, protracted drought, and the COVID-19 pandemic) during 2019-20, and policy missteps in 2019, leading to a deep recession and high inflation.",
  "publishDate": "2022-03-24",
  "sections": [
    {
      "heading": "Economic developments and shocks (2019–21)",
      "content": "- Zimbabwe experienced severe exogenous shocks (cyclone Idai, protracted drought, and the COVID-19 pandemic) during 2019-20, and policy missteps in 2019, leading to a deep recession and high inflation.\n- Real GDP contracted cumulatively by 11.7 percent during 2019-20.\n- Inflation reached 837 percent (y/y) by July 2020.\n- Pandemic-related spending:\n  - 2020: equivalent to 2 percent of GDP, financed by reallocation within the budget.\n  - 2021: about 1.6 percent of GDP, partially financed by the SDR allocation.\n- Additional 2021 expenditures increased to bolster food security and farm inputs to vulnerable households.\n- The Reserve Bank of Zimbabwe introduced a medium-term bank accommodation lending facility and private sector lending facility.\n- Real GDP rose by 6.3 percent in 2021 reflecting a bumper maize harvest, strong pickup in mining, and buoyant construction.\n- Inflation lowered to 60.7 percent (y/y) at end-2021 following a tighter policy stance since mid-2020 (relative to 2019).\n- Fiscal policy was tightened in 2020‑21, reflecting increased revenues and lowered spending.\n- The current account balance turned into a surplus during 2019-21, reflecting favorable metals’ prices, lower imports, and a surge in remittances.\n- Persistent challenges: high double-digit inflation, wide parallel foreign exchange market premia, rising poverty, and about a third of the population at risk of food insecurity."
    },
    {
      "heading": "Outlook and projections",
      "content": "- Output recovery resumed in 2021 and is expected to continue, albeit at a slower pace:\n  - Growth projected at about 3½ percent in 2022 and 3 percent over the medium term.\n- Authorities’ fiscal targets:\n  - Aim to limit the 2022 budget deficit at 1½ percent of GDP, and below 2 percent of GDP over the medium-term.\n- External sector projection:\n  - Current account surplus expected to decline over the medium term, reflecting a pickup in imports and slowdown in remittances.\n- Scarring risks: effects from the COVID-19 pandemic and protracted drought compounded existing structural constraints and would lead to scarring on the economic outlook."
    },
    {
      "heading": "Reengagement, debt, and arrears",
      "content": "- International reengagement has lagged as stakeholders seek political and economic reforms.\n- The 2019 Staff-Monitored Program experienced significant policy slippages and elapsed without a review.\n- Authorities have developed a debt resolution strategy and started token payments to creditors to make progress on reengagement.\n- Zimbabwe remains in debt distress, with large external arrears to official creditors."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Directors welcomed signs of economic recovery and commended authorities for swift pandemic response and prioritizing social support.\n- Key recommendations and assessments:\n  - Fiscal policy should restore macroeconomic stability and create fiscal space for priority spending.\n  - Enhance revenue mobilization, including through broadening the tax base and improving tax administration and compliance.\n  - Accelerate reforms of state-owned enterprises and enhance fiscal controls to limit fiscal risks.\n  - Use the SDR allocation prudently and transparently.\n  - Further efforts to enhance debt management and transparency; continue re-engagement with external creditors, including token payments and a debt resolution strategy.\n  - Further monetary tightening recommended given persistently high inflation.\n  - Increase operational independence of the central bank, discontinue its quasi-fiscal operations, and improve coordination with fiscal authorities.\n  - Allow greater exchange rate flexibility by enabling a more transparent and market-driven price process; phase out exchange restrictions and multiple currency practices as soon as conditions permit.\n  - Continue vigilance to ensure financial stability and address remaining banking sector weaknesses.\n  - Progress on AML/CFT framework welcomed; further efforts encouraged to address remaining deficiencies.\n  - Address institutional weaknesses, implement the 2020 National Anti-Corruption Strategy, prioritize structural reforms to improve the business climate and build resilience to climate change.\n  - A new Staff Monitored Program could help establish a track record of sound policies and support re-engagement efforts."
    },
    {
      "heading": "Selected economic indicators (highlights from Table 1)",
      "content": "- Real GDP growth: -6.1 (2019); -5.3 (2020); 6.3 (2021); 3.5 (2022); 3.0 (2023).\n- Nominal GDP (US$ millions): 22,600 (2019); 21,670 (2020); 24,124 (2021); 26,425 (2022); 27,963 (2023).\n- GDP deflator: 440.5 (2019); 569.0 (2020); 128.5 (2021); 68.1 (2022); 39.8 (2023).\n- CPI (annual average): 255.3 (2019); 557.2 (2020); 98.5 (2021); 56.4 (2022); 46.3 (2023).\n- CPI (end-of-period): 521.1 (2019); 348.6 (2020); 60.7 (2021); 55.0 (2022); 42.0 (2023).\n- Money supply (M2) (annual percentage change): 249.4 (2019); 481.3 (2020); 142.4 (2021); 77.4 (2022); 50.6 (2023).\n- Money Base (annual percentage change): 217.0 (2019); 81.7 (2020); 38.4 (2021); 35.0 (2022); 30.0 (2023).\n- Credit to the private sector (annual percentage change): 173.8 (2019); 571.8 (2020); 158.9 (2021); 74.3 (2022); 40.8 (2023).\n- Credit to the central government (annual percentage change): 40.7 (2019); 65.5 (2020); 115.2 (2021); 138.7 (2022); 112.5 (2023).\n- Money supply (in percent of GDP): 18.6 (2019); 17.0 (2020); 17.3 (2021); 18.1 (2022).\n- Credit to the private sector (in percent of GDP): 5.9 (2019); 6.7 (2020); 6.6 (2021).\n- Official Exchange rate (ZWL:USD exchange rate, annual average): 8.2 (2019); 51.3 (2020); 88.6 (2021).\n- Official Exchange rate (ZWL:USD exchange rate, end-of-period): 16.8 (2019); 81.8 (2020); 107.0 (2021).\n- Central government (percent of GDP):\n  - Revenue and grants: 12.3 (2019); 15.4 (2020); 17.2 (2021).\n  - Expenditure and net lending: 13.5 (2019); 14.9 (2020); 18.7 (2021); 18.9 (2022); 18.8 (2023).\n  - Overall balance: -1.3 (2019); 0.5 (2020); -1.5 (2021); -1.9 (2022); -1.2 (2023).\n  - Primary balance: -0.9 (2019); 0.8 (2020); -1.1 (2021); -1.2 (2022).\n- Balance of payments (US$ millions):\n  - Exports of goods and services: 5,267 (2019); 5,263 (2020); 6,448 (2021); 6,607 (2022); 6,818 (2023).\n  - Imports of goods and services: 5,398 (2019); 5,489 (2020); 6,771 (2021); 7,127 (2022); 7,588 (2023).\n  - Current account balance (excluding official transfers): 920 (2019); 1,096 (2020); 1,170 (2021); 866 (2022); 413 (2023).\n  - Gross international reserves: 151 (2019); 34 (2020); 716 (2021); 540 (2022).\n  - Months of imports of goods and services: 0.3 (2019); 0.1 (2020); 1.3 (2021); 0.9 (2022).\n- Public debt (US$ millions):\n  - Consolidated public sector debt: 10,415 (2019); 14,915 (2020); 17,855 (2021); 18,373 (2022); 19,031 (2023).\n  - Public and publicly guaranteed external debt: 9,609 (2019); 14,485 (2020); 17,290 (2021); 17,468 (2022); 17,594 (2023).\n  - Of which: Arrears: 6,406 (2019); 10,022 (2020); 12,722 (2021); 12,912 (2022); 13,102 (2023).\n  - PPG external debt (percent of GDP) from DSA: 87.5 (2019); 106.6 (2020); 86.6 (2021); 73.8 (2022); 70.6 (2023).\n\nIMF Executive Board, Press Release No. 22/88, March 24, 2022.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- IMF COVID-19 Hub\n- Policy Tracker\n- Financial Assistance\n- Questions & Answers\n- Zimbabwe and the IMF\n- IMF Policy Advice -- A Factsheet\n- Special Drawing Rights (SDRs) -- A Factsheet\n- Press Releases\n- PRESS CENTER\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/2022/03/24/pr2288-zimbabwe-imf-executive-board-concludes-2022-article-iv-consultation"
    }
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    "Published: March 24, 2022",
    "Zimbabwe experienced severe exogenous shocks (cyclone Idai, protracted drought, and the COVID-19 pandemic) during 2019-20, and policy missteps in 2019, leading to a deep recession and high inflation.",
    "Real GDP contracted cumulatively by 11.7 percent during 2019-20.",
    "Inflation reached 837 percent (y/y) by July 2020.",
    "Pandemic-related spending:",
    "Additional 2021 expenditures increased to bolster food security and farm inputs to vulnerable households.",
    "The Reserve Bank of Zimbabwe introduced a medium-term bank accommodation lending facility and private sector lending facility.",
    "Real GDP rose by 6.3 percent in 2021 reflecting a bumper maize harvest, strong pickup in mining, and buoyant construction.",
    "Inflation lowered to 60.7 percent (y/y) at end-2021 following a tighter policy stance since mid-2020 (relative to 2019).",
    "Fiscal policy was tightened in 2020‑21, reflecting increased revenues and lowered spending.",
    "The current account balance turned into a surplus during 2019-21, reflecting favorable metals’ prices, lower imports, and a surge in remittances.",
    "Persistent challenges: high double-digit inflation, wide parallel foreign exchange market premia, rising poverty, and about a third of the population at risk of food insecurity.",
    "Output recovery resumed in 2021 and is expected to continue, albeit at a slower pace:",
    "Authorities’ fiscal targets:",
    "External sector projection:",
    "Scarring risks: effects from the COVID-19 pandemic and protracted drought compounded existing structural constraints and would lead to scarring on the economic outlook.",
    "International reengagement has lagged as stakeholders seek political and economic reforms.",
    "The 2019 Staff-Monitored Program experienced significant policy slippages and elapsed without a review.",
    "Authorities have developed a debt resolution strategy and started token payments to creditors to make progress on reengagement.",
    "Zimbabwe remains in debt distress, with large external arrears to official creditors.",
    "Directors welcomed signs of economic recovery and commended authorities for swift pandemic response and prioritizing social support.",
    "Key recommendations and assessments:",
    "Real GDP growth: -6.1 (2019); -5.3 (2020); 6.3 (2021); 3.5 (2022); 3.0 (2023).",
    "Nominal GDP (US$ millions): 22,600 (2019); 21,670 (2020); 24,124 (2021); 26,425 (2022); 27,963 (2023).",
    "GDP deflator: 440.5 (2019); 569.0 (2020); 128.5 (2021); 68.1 (2022); 39.8 (2023).",
    "CPI (annual average): 255.3 (2019); 557.2 (2020); 98.5 (2021); 56.4 (2022); 46.3 (2023).",
    "CPI (end-of-period): 521.1 (2019); 348.6 (2020); 60.7 (2021); 55.0 (2022); 42.0 (2023).",
    "Money supply (M2) (annual percentage change): 249.4 (2019); 481.3 (2020); 142.4 (2021); 77.4 (2022); 50.6 (2023).",
    "Money Base (annual percentage change): 217.0 (2019); 81.7 (2020); 38.4 (2021); 35.0 (2022); 30.0 (2023).",
    "Credit to the private sector (annual percentage change): 173.8 (2019); 571.8 (2020); 158.9 (2021); 74.3 (2022); 40.8 (2023).",
    "Credit to the central government (annual percentage change): 40.7 (2019); 65.5 (2020); 115.2 (2021); 138.7 (2022); 112.5 (2023).",
    "Money supply (in percent of GDP): 18.6 (2019); 17.0 (2020); 17.3 (2021); 18.1 (2022).",
    "Credit to the private sector (in percent of GDP): 5.9 (2019); 6.7 (2020); 6.6 (2021).",
    "Official Exchange rate (ZWL:USD exchange rate, annual average): 8.2 (2019); 51.3 (2020); 88.6 (2021).",
    "Official Exchange rate (ZWL:USD exchange rate, end-of-period): 16.8 (2019); 81.8 (2020); 107.0 (2021).",
    "Central government (percent of GDP):",
    "Balance of payments (US$ millions):",
    "Public debt (US$ millions):",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
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    "[Zimbabwe and the IMF](http://www.imf.org/external/country/ZWE/index.htm)",
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