## IMF Staff Completes 2024 Article IV Mission to Zimbabwe

_IMF News, February 14, 2024_

## Source details

**Canonical URL:** [IMF Staff Completes 2024 Article IV Mission to Zimbabwe](https://www.imf.org/en/news/articles/2024/02/13/pr2447-zimbabwe-imf-staff-completes-2024-article-iv-mission)

## Other formats

- [Markdown version](/en/news/articles/2024/02/13/pr2447-zimbabwe-imf-staff-completes-2024-article-iv-mission/index.md)
- [Structured JSON version](/en/news/articles/2024/02/13/pr2447-zimbabwe-imf-staff-completes-2024-article-iv-mission/index.json)
- [Bundle manifest](/en/news/articles/2024/02/13/pr2447-zimbabwe-imf-staff-completes-2024-article-iv-mission/bundle-manifest.json)

## Bibliographic details
- Published: February 14, 2024

---

### Mission overview
- Mission dates: January 31-February 14, 2024.
- Press release date: February 14, 2024.
- IMF team leader: Mr. Wojciech Maliszewski.
- Purpose: Discuss authorities’ request for a Staff Monitored Program (SMP) and commence 2024 Article IV Consultation.
- Statement nature: End-of-Mission press release conveying preliminary findings; views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

### Economic outlook and recent performance
- GDP growth in 2023 is estimated at 5.3 percent.
- Growth projection for 2024: expected to decelerate to about 3¼ percent.
- Drivers in 2023: expansion in agriculture and mining; highly-dollarized domestic trade and services buoyed by related foreign currency inflows and remittances.
- 2024 headwinds: impact of a drought on agriculture production and lower commodity prices expected to reduce foreign currency inflows; remittances likely to remain strong.
- Current account: projected to be in small surplus.
- Domestic liquidity: surplus in the dollarized part of the economy expected to support growth in domestic trade, services, and construction.

### Exchange rate, inflation, and currency instability
- Official exchange rate depreciation: about 95 percent since the beginning of December 2023.
- Gap to parallel market rate: remains wide (above 30 percent).
- ZWL inflation: described as still very high.
- Exchange restrictions issue: retailers prescribed to use the official ZWL exchange rate with up to a 10 percent margin—this inflates US dollar prices, promotes informality, erodes the tax base, and undermines longer-term growth prospects.

### Fiscal pressures and RBZ quasi-fiscal operations (QFOs)
- Priority focus: finalize transfer of the Reserve Bank of Zimbabwe’s (RBZ) quasi-fiscal operations to the Treasury and address other sources of fiscal pressures.
- RBZ external liabilities to be transferred to the Treasury include: long-term loans, short-term liabilities, and the “blocked funds”.
- Fiscal impact: larger-than-anticipated costs of servicing these obligations will open a financing gap in the 2024 budget.
- IMF staff encouragements:
  - Identify options to close the financing gap in a way that avoids inflationary financing.
  - Develop and implement a comprehensive plan to close the gap.
  - Ensure appropriate legal framework is in place to complete the transfer.
- Other fiscal sources: non-core (not related to the goal of price and financial stability) operations of the RBZ and operations of SOEs.

### FX market liberalization and monetary framework
- IMF staff recommendations:
  - Accelerate FX market reform to promote more transparent and market-driven price discovery in the official exchange rate.
  - Remove existing exchange restrictions and distortions, specifically eliminate the restriction on the 10 percent allowable trading margin for pricing domestic transactions.
  - Establish an effective framework for exchange rate and monetary policies.
  - Prepare carefully for the framework, including comprehensively addressing underlying sources of fiscal pressures.
  - Amend the RBZ Act to narrow the RBZ’s legal mandate to core functions.

### Structural reforms, governance, and anti-corruption
- Emphasis on structural reforms to:
  - Improve the business climate.
  - Strengthen economic governance.
  - Reduce corruption vulnerabilities.
- Link to national strategy: reforms would support Zimbabwe’s National Development Strategy 1 (2021-2025).
- Specific governance advice:
  - Ensure corporate governance arrangements, transparency and financial reporting, and accountability oversight of the recently established Mutapa fund are in line with international standards and good practices.

### Debt, reengagement, and IMF financial support conditions
- Debt overhang: resolution required for sustainable development.
- International reengagement: critical for debt resolution and access to financial support.
- Authorities’ reengagement channel: Structured Dialogue Platform.
- Current IMF constraint: IMF is precluded from providing financial support to Zimbabwe due to its unsustainable debt situation—based on the IMF’s Debt Sustainability Analysis (DSA)—and official external arrears.
- Preconditions for an IMF financial arrangement:
  - Clear path to comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears.
  - A reform plan consistent with durably restoring macroeconomic stability; enhancing inclusive growth; lowering poverty; and strengthening economic governance.

### IMF engagement, technical assistance, and consultations
- Ongoing IMF support areas: revenue mobilization, expenditure control, financial supervision, debt management, economic governance and anti-corruption, and macroeconomic statistics.
- Stakeholders consulted: Minister of Finance and Economic Development Hon. Professor Mthuli Ncube; Deputy Minister Hon. David Mnangagwa; RBZ Governor Dr. John Mangudya; other senior government and RBZ officials; private sector; civil society organizations; and Zimbabwe’s development partners.

### Key recommendations and next steps (enumerated)
- Finalize transfer of RBZ QFO-related external liabilities to the Treasury and put in place appropriate legal framework.
- Develop and implement a comprehensive, non-inflationary plan to close the 2024 budget financing gap created by QFO transfers.
- Accelerate FX market reform, including:
  - Promote transparent, market-driven price discovery in the official exchange rate.
  - Remove exchange restrictions and eliminate the 10 percent allowable trading margin for pricing domestic transactions.
- Establish an effective exchange rate and monetary policy framework; amend the RBZ Act to narrow RBZ mandate to core functions.
- Progress structural reforms to improve business climate, strengthen governance, and reduce corruption vulnerabilities; ensure Mutapa fund governance meets international standards.
- Advance international reengagement through the Structured Dialogue Platform to enable debt restructuring, clearance of arrears, and access to concessional financing.

*Source: IMF staff end-of-mission press release, February 14, 2024.*

---


## 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/)
- [DSA](https://www.imf.org/external/pubs/ft/dsa/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2024/02/13/pr2447-zimbabwe-imf-staff-completes-2024-article-iv-mission_