By WASHINGTON — In a major milestone for its ongoing economic stabilization and international re-engagement efforts, Zimbabwe has successfully secured International Monetary Fund (IMF) management approval for the completion of the second review under its 10-month Staff-Monitored Program (SMP).
The announcement, released by the IMF in Washington, D.C., highlights robust program implementation through the end of June 2026, marking a significant step forward as the Southern African nation navigates debt resolution, arrears clearance, and economic reform.
Resilient Economic Performance Amid Global Headwinds
According to the IMF report, Zimbabwe’s economy has demonstrated notable resilience. Economic activity expanded steadily through the first half of 2026, supported by strong mineral exports, favourable global commodity prices, and robust remittance inflows.
Annual inflation for the domestic ZiG currency remained anchored in low single digits, resting at 3.7 percent in September, while the exchange rate maintained broad stability. Furthermore, stronger-than-expected fiscal revenues contributed to a healthy primary budget surplus.
Looking ahead, the macroeconomic outlook for 2026 remains favourable. Real Gross Domestic Product (GDP) growth is projected at 5 percent, with inflation expected to stay in single digits and the current account remaining in surplus. However, growth is anticipated to moderate to 3.5 percent in 2027, primarily due to the predicted agricultural impacts of an El Niño-related drought, before rebounding in 2028.
The IMF noted that downside risks persist, driven largely by potential weather shocks and renewed volatility in commodity and energy prices.
Strong Program Compliance and Key Hurdles
Implementation of the SMP has been notably firm. All end-June quantitative targets, structural benchmarks, and continuous commitments were successfully met.
Nevertheless, challenges remain in targeted social protection. While most indicative targets were observed, the floor on protected social and priority spending was missed due to persistent execution bottlenecks affecting key social programs. In response, IMF staff welcomed the adoption of a new program-by-program financing and execution plan for the remainder of the SMP to ensure that macroeconomic stabilization translates into tangible support for vulnerable groups.
Policy Recommendations: Fiscal Discipline and Exchange Rate Reforms
To preserve stability and build resilience against future shocks, the IMF emphasized several critical policy imperatives:
- Fiscal Prudence: Stronger-than-expected revenues offer a crucial window to build fiscal buffers against food-security and energy pressures. The 2027 Budget must rely on conservative revenue assumptions to prevent structural deficits while safeguarding high-impact development and social outlays. Enhancing expenditure controls, cash planning, and public financial management will be vital to ensuring budget credibility and preventing new arrears.
- Monetary and Exchange Rate Management: The Reserve Bank of Zimbabwe has maintained an appropriately tight monetary stance, which has successfully reined in inflation and stabilized the exchange rate. The IMF underscored the need to maintain this stance while advancing liquidity management, establishing a more transparent foreign exchange trading platform, and crafting a sequenced strategy toward a market-based foreign exchange system.
- Governance and State-Owned Enterprises: Containing fiscal risks will require rigorous oversight of Mutapa and other state-owned enterprises (SOEs). This includes strict adherence to borrowing controls, transparent publication of audited financial statements, and systemic monitoring of SOE financial health. Additionally, finalizing the national anti-corruption strategy will further bolster economic governance.
Paving the Way for Debt Resolution
While Staff-Monitored Programs are informal agreements that do not entail immediate IMF Executive Board endorsement, they serve as vital stepping stones for building a solid track record of policy execution.
The successful clearance of this second review reinforces Zimbabwe’s broader re-engagement agenda. Continued commitment to structural reforms, combined with ongoing data reconciliation and a credible, fully financed strategy for arrears clearance, will be instrumental in deepening constructive dialogue with international creditors and development partners.
