## IMF Staff Completes 2024 Article IV Mission to Zimbabwe _IMF News, June 27, 2024_ ## Source details **Canonical URL:** [IMF Staff Completes 2024 Article IV Mission to Zimbabwe](https://www.imf.org/en/news/articles/2024/06/27/pr-24248-zimbabwe-imf-staff-completes-2024-article-iv-mission) ## Other formats - [Markdown version](/en/news/articles/2024/06/27/pr-24248-zimbabwe-imf-staff-completes-2024-article-iv-mission/index.md) - [Structured JSON version](/en/news/articles/2024/06/27/pr-24248-zimbabwe-imf-staff-completes-2024-article-iv-mission/index.json) - [Bundle manifest](/en/news/articles/2024/06/27/pr-24248-zimbabwe-imf-staff-completes-2024-article-iv-mission/bundle-manifest.json) ## Bibliographic details - Published: June 27, 2024 --- ### Mission overview - IMF staff team led by Mr. Wojciech Maliszewski conducted a second mission to Harare during June 18-27, 2024 to conclude the 2024 Article IV Consultation. - Press Release No. 24/248. - End-of-Mission statements convey preliminary findings and do not necessarily represent the views of the IMF’s Executive Board. ### Near-term growth, inflation, and balance-of-payments outlook - Growth expected to decelerate to about 2 percent in 2024 (from 5.3 percent in 2023) due to a devastating El Niño-induced drought and higher import bills worsening the balance-of-payments outlook. - Growth expected to recover strongly in 2025 to about 6 percent, supported by a rebound in agriculture and ongoing capital projects in manufacturing. - Assuming macro-stabilization is sustained, cumulative inflation in the remainder of the year is projected at about 7 percent. ### Monetary policy, exchange rate, and the Zimbabwe Gold (ZiG) - The Reserve Bank of Zimbabwe (RBZ) introduced in April 2024 a new currency—the Zimbabwe Gold (ZiG). - The ZiG official exchange rate has so far remained stable, ending a bout of macroeconomic instability in the first 3 months of the year (when the Zimbabwean dollar depreciated by about 260 percent). - Mission welcomes improvement in monetary policy discipline and recommends further refinements to the policy framework. - Policy recommendations: - Stabilize the ZiG nominal exchange rate against a suitable basket of currencies (accounting for the dominant role of the USD in the economy). - Control base money growth: for now through unremunerated Non-Negotiable Certificates of Deposits (NNCDs), but over time through indirect (interest-rate-based) monetary instruments to increase the attractiveness of the new currency. - Determine the exchange rate in a deeper market to provide relevant information for monetary policy decisions by identifying and removing impediments to FX market functioning to promote price discovery. ### Fiscal position, RBZ quasi-fiscal operations (QFOs), and financing gap - Transfer of past debt obligations related to the RBZ’s quasi-fiscal operations (QFOs) to the Treasury was an important step to strengthen financial discipline. - Enhanced coordination between the RBZ and the Ministry of Finance, Economic Development and Investment Promotion (MoFEDIP) on macro-policies and liquidity management is welcomed. - The mission assessed that: - Cost of servicing the QFO-related debt and T-bills (including about 8 percent of GDP issued last year), combined with weaker-than-expected revenues and drought-related spending, opened a sizeable financing gap in the 2024 budget. - The financing gap needs to be closed in a way that does not undermine the monetary policy stance. - The mission notes ongoing work to identify measures to close the gap and stands ready to provide support. ### Mutapa Investment Fund governance - Strengthened governance for the newly constituted Mutapa Investment Fund is key for stabilization. - Recommended steps: - Ensure the fund’s mandate is clearly defined and aligned with the National Development Strategy. - Enhance transparency and ensure full integration in the budget process (Mutapa’s annual operating budget, capital investment, asset sales, and borrowing plans should be subject to approval by the MoFEDIP). - Adhere to highest standards of corporate accountability. - Note: financial management of public entities is regulated by the Public Finance Management Act. ### Structural reforms, economic governance, and corruption - Discussed structural reforms to improve the business climate, strengthen economic governance, and reduce corruption vulnerabilities. - Observations: - Zimbabwe’s economic governance has significant weaknesses and corruption poses risks to macroeconomic performance. - Addressing these weaknesses is key to promoting sustained and inclusive growth. ### International reengagement, debt, and IMF financial support - International reengagement is critical for debt resolution and arrears clearance to open access to external financing. - Authorities' reengagement efforts through the Structured Dialogue Platform are key for attaining debt sustainability and accessing concessional support. - The mission encourages continued adherence to high standards of public debt transparency, including appropriate treatment of recently issued debt in public and publicly-guaranteed debt statistics. - IMF engagement and conditionality on financial support: - IMF provides policy advice and extensive technical assistance in revenue mobilization, expenditure control, financial supervision, debt management, economic governance and anti-corruption, and macroeconomic statistics. - IMF is currently 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. - An IMF financial arrangement would require a clear path to comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears and a reform plan consistent with durably restoring macroeconomic stability; enhancing inclusive growth; lowering poverty; and strengthening economic governance. ### Consultations and acknowledgements - IMF staff held meetings with: - Minister of Finance, Economic Development and Investment Promotion Honorable Professor Mthuli Ncube; Deputy Minister Honorable David Mnangagwa; Permanent Secretary Mr. George Guvamatanga; RBZ Governor Dr. John Mushayavanhu; Dr. Martin Rushwaya, Chief Secretary to the President and Cabinet; other senior government and RBZ officials; honorable members of Parliament; and representatives of the private sector, civil society, and Zimbabwe’s development partners. - Mission statement: “The IMF staff would like to thank the Zimbabwean authorities and other stakeholders for constructive discussions and support during the 2024 Article IV consultation process.” *Source: IMF press release — IMF Staff Completes 2024 Article IV Mission to Zimbabwe (June 27, 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) - [The IMF and Good Governance -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/the-imf-and-good-governance) - [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/2024/06/27/pr-24248-zimbabwe-imf-staff-completes-2024-article-iv-mission_