Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the 2025 Article IV consultation with Zimbabwe1. The authorities have consented to the publication of the Staff Report prepared for this consultation.
Despite lingering policy challenges, Zimbabwe is experiencing a degree of macroeconomic stability. Growth is recovering from a sharp slowdown from 5 percent in 2023 to 1.7 percent in 2024, which was driven by a severe drought that significantly lowered agricultural and hydro-power electricity production, with knock-on effects to other sectors from power shortage. Declining prices for key metal exports also weighed on growth through lower mining output. Economic activity recovered in the first half of 2025, driven by better climate conditions, record high gold prices, and sustained workers’ remittances inflows.
Fiscal financing pressures have intensified recently. By 2024, the net external financing had turned negative and the SDR allocation channeled for budget financing had been fully utilized. Improvements in the revenue collection provided some reprieve, with the revenue ratio increasing sharply between 2023 and 2024 achieved through a reduction in VAT tax reliefs, taxation of the public sector employees allowance introduced during the pandemic, increased fees and levies, and steps to reduce smuggling. But spending needs have also increased, notably from higher public sector wages, capital outlays, and servicing the debt taken over by the Treasury from the RBZ and the debt related to the acquisition of assets for the Mutapa investment Fund. The fiscal deficit remained broadly stable between 2023 and 2024, but less financing led to the accumulation of nearly US$600 million of domestic expenditure arrears in 2024. The deficit was financed by T-bills issuance and direct borrowing from the RBZ’s overdraft facility to service debt, contributing to the expansion of domestic liquidity—with the ZiG monetary base increasing by around 215 percent between the introduction of the ZiG in April 2024 and September 2024—and an overnight drop in the value of the ZiG in September 2024, and a significant buildup of expenditure arrears that continued into 2025.
Following the end-September drop in the value of the ZiG, the RBZ halted monetary financing to pay for the Treasury debt servicing obligations and increased statutory reserve requirements for both ZiG and FX demand deposits and raised the policy rate. The premium between the Willing-Buyer-Willing-Seller (WBWS) and the parallel exchange rates has narrowed, and, with the ZiG monetary base growth slowing to around 30 percent from October 2024 to April 2025, both the WBWS and the parallel market exchange rates have largely stabilized, bringing ZiG monthly inflation down to 0.3 percent in June 2025.
Zimbabwe’s economic growth is expected to rebound to 6 percent this year and the current account surplus to widen, both driven by a good agricultural season, record-high gold prices, and sustained remittance inflows. But foreign reserve buffers remain low despite recurring current account surpluses. In addition, growth is expected to slow (to about 3.5 percent) over the medium term, as market confidence in the durability of macroeconomic stabilization remains low, and fiscal financing needs crowd out private sector growth. Inflation is expected to remain low, driven by tight monetary policy. Significant downside risks persist, notably from a return to monetary financing.
Zimbabwe continues its reengagement with international creditors to achieve debt resolution and arrears clearance. The Structured Dialogue Platform (SDP) provides a framework for dialogue on three key pillars: (i) economic reforms; (ii) political-governance reforms; and (iii) farmers’ compensation and land tenure reforms. The authorities' reengagement efforts are key for attaining debt sustainability and gaining access to concessional external financing.
Executive Board Assessment2
Executive Directors agreed with the thrust of the staff appraisal. They welcomed the recent tightening of policies, notably the halting of quasi‑fiscal operations and monetary financing, which have helped reduce inflation and achieve a degree of macroeconomic stability. They also noted the growth recovery amid favorable terms of trade and fading effects from adverse climate shocks.
Directors noted however that important challenges remain from fiscal financing pressures and the accumulation of domestic arrears, limited access to official external financing, low reserve buffers, low domestic currency (ZiG) monetization, a persistent gap between the official and parallel exchange rates, structural gaps, and governance vulnerabilities. They recommended building on recent momentum to implement reforms to address these challenges and help achieve long‑lasting macroeconomic stability.
Directors stressed that a tighter fiscal stance is needed to close the fiscal financing gap, prevent further accumulation of domestic arrears, and preclude a return to monetary financing. They agreed that adjustment should include both revenue and spending measures, notably to rationalize tax incentives, address tax administration weaknesses, and to reduce spending, particularly on the public compensation bill, while protecting targeted social spending and public investment. Directors emphasized the need to strengthen public financial management to support durable adjustment, and to strengthen the governance framework for the Mutapa Investment Fund to help control fiscal risks.
Directors underscored the importance of enhancing the monetary and FX frameworks to increase policy effectiveness and credibility. They recommended reducing the Reserve Bank of Zimbabwe’s FX market footprint by gradually redirecting surrender requirements into the market and eliminating exchange restrictions for current account transactions and CFMs as conditions allow, improving monetary control through market‑based instruments, encouraging ZiG demand, and increasing clarity on the mono‑currency transitional plan.
Directors welcomed the progress towards strengthening financial sector oversight. They encouraged further steps to strengthen regulatory and supervisory practices, including to implement the Basel III capital standard.
Directors concurred that closing important structural gaps could significantly boost Zimbabwe’s economic potential. They welcomed recent progress on AML/CFT reforms and noted that an acceleration of these, as well as of other governance reforms, was critical for reducing vulnerabilities and sustaining medium‑term growth.
Directors acknowledged that Zimbabwe continues its reengagement with international creditors under the Structured Dialogue Platform to achieve debt resolution and arrears clearance. They noted that a stronger policy reform track record, supported by an SMP, could help the authorities’ reengagement efforts.
It is expected that the next Article IV consultation with Zimbabwe will be held on the standard 12‑month cycle.
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Table 1. Zimbabwe: Selected Economic Indicators, 2022–30
(Millions of US Dollars Unless Otherwise Specified)
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2022
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2023
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2024
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2025
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2026
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2027
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2028
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2029
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2030
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Act.
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Est.
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Proj.
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(annual percentage change, unless otherwise indicated)
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Output and prices
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Real GDP growth1/
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6.1
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5.3
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1.7
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6.0
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4.6
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3.6
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3.5
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3.5
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3.5
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Nominal GDP (US$ millions)
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48,570
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44,447
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45,719
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49,584
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51,560
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53,441
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55,308
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57,218
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59,237
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GDP deflator
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274.5
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768.6
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1097.2
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71.1
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18.3
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10.1
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8.0
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8.0
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8.0
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CPI (annual average)
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193.4
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667.4
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736.1
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89.0
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18.2
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10.1
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8.0
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8.0
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8.0
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CPI (end-of-period)
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243.8
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778.8
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686.8
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30.7
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12.7
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8.0
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8.0
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8.0
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8.0
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Money and credit
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Money supply (M2)
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393.3
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712.9
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930.8
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46.1
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30.6
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20.3
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18.0
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17.8
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17.3
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Money Base
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300.2
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1,842.7
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2421.3
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29.0
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31.4
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20.9
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18.6
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18.1
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17.7
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Credit to the private sector
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388.2
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914.1
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1070.4
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23.6
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16.6
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13.8
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9.8
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8.5
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7.4
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Credit to the central government
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470.3
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876.4
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538.1
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479.7
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19.7
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15.0
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15.3
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15.7
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16.5
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Money supply (in percent of GDP)
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12.6
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11.2
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9.4
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7.6
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8.0
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8.5
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8.9
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9.4
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9.9
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Credit to the private sector (in percent of GDP)
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5.9
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6.5
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6.3
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4.3
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4.0
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4.0
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3.9
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3.8
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3.7
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(ZWL$ per US$ until 2023, ZiG in 2024)
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Official exchange rate
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Annual Average Exchange Rate
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380.9
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3,516.2
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16.7
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End-of-Period Exchange Rate
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681.7
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6,104.7
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25.8
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Annual Average Exchange Rate, Year-on-year Percent Change
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328.9
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901.5
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999.6
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End-of-Period Exchange Rate, Year-on-year Percent Change
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529.4
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791.4
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956.8
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(percent of GDP)
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Central government 2/
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Revenue and grants
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11.1
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11.6
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12.9
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14.7
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15.0
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15.1
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15.1
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15.1
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15.1
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Expenditure and net lending
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12.2
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21.1
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13.3
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15.4
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15.4
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15.4
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15.5
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15.5
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15.6
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Overall balance 3/
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-1.1
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-9.5
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-0.4
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-0.7
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-0.4
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-0.3
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-0.4
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-0.4
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-0.4
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Primary balance 3/
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-0.9
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-9.2
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0.2
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-0.1
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0.2
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0.3
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0.2
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0.2
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0.1
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(US$ millions, unless otherwise indicated)
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Balance of payments
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Exports of goods and services
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7,453
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7,603
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8,252
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9,159
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9,525
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9,833
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10,234
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10,632
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11,006
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(annual percentage change)
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13.4
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2.0
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8.5
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11.0
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4.0
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3.2
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4.1
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3.9
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3.5
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Imports of goods and services
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9,569
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10,293
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10,715
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10,888
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11,395
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11,826
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12,140
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12,409
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12,996
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(annual percentage change)
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18.1
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7.6
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4.1
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1.6
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4.7
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3.8
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2.7
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2.2
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4.7
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Current account balance (excluding official transfers)
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305
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135
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501
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961
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873
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801
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941
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1,058
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832
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(percent of GDP)
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0.6
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0.3
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1.1
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1.9
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1.7
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1.5
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1.7
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1.8
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1.4
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Gross international reserves
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597
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110
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484
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800
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1,144
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1,508
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1,933
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2,430
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2,938
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(months of imports of goods and services)
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0.7
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0.1
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0.5
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0.9
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1.2
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1.5
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1.9
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2.4
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2.7
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Public debt
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Consolidated public sector debt
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18,016
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21,077
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23,278
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23,665
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23,893
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24,126
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24,368
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24,616
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24,870
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(percent of GDP)
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66.8
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76.1
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72.9
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49.5
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45.5
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43.5
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42.5
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41.5
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40.4
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Public and publicly guaranteed external debt
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16,327
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16,538
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16,745
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16,788
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16,739
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16,676
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16,629
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16,614
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16,585
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(percent of GDP)
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60.5
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59.6
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52.5
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35.1
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31.9
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30.1
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29.0
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28.0
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27.0
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Of which: Arrears
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10,471
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10,770
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11,909
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12,506
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12,976
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13,457
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13,894
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14,268
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14,616
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(percent of GDP)
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38.8
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38.8
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40.1
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28.1
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26.6
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26.1
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26.0
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25.8
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25.6
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Sources: Zimbabwean authorities; IMF staff estimates and projections.
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1/ At constant 2019 prices.
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2/ The 2024 expenditure estimate includes QFOs interest charge (transferred to the Treasury).
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3/ Overall balance and primary balance are on commitment basis based on staff estimates of arrears.
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1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the IMF Executive Board.
2 At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of the IMF Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm
