IMF hails Zim’s economic recovery

LIVINGSTONE MARUFU

Zimbabwe’s economy is rebounding faster than anticipated, buoyed by a strong agricultural season, firm mining output, and a sharp slowdown in inflation.

But the International Monetary Fund (IMF) has cautioned that the recovery remains fragile  and could quickly unravel unless Harare reins in public spending and enforces tighter fiscal discipline.

In its latest assessment following an Article IV Mission to Harare, the IMF said Zimbabwe’s 2025 economic performance had “surpassed expectations” and projected that the growth momentum would continue into 2026 — provided the government sustains prudent fiscal and monetary policies.

“Zimbabwe’s economic recovery in 2025 is stronger than previously anticipated, given the rebound in agriculture and solid performances in mining, while inflation has continued to significantly ease, supported by a stable foreign exchange rate. The economy is expected to maintain strong momentum in 2026,” said Wojciech Maliszewski, head of the IMF staff mission to Zimbabwe.

However, Maliszewski warned that sustaining this progress will depend heavily on the government’s ability to “live within its means” by aligning expenditures with available revenues and avoiding the accumulation of arrears.

“Discussions in Harare focused on enhancing fiscal discipline in the 2026 budget framework by aligning expenditures with revenues and available non-inflationary financing sources, while avoiding the accumulation of expenditure arrears,” he said.

“Adopting credible revenue projections supported by concrete policy and administrative tax measures for 2026, and strengthening expenditure management, would help enhance fiscal resilience and the management of fiscal risks and pressures.”

The warning underscores a central vulnerability in Zimbabwe’s economic recovery: the government’s limited access to external credit due to its over US$21 bn debt and arrears, which continue to block access to concessional funding from multilateral lenders such as the IMF, World Bank, and African Development Bank.

Unable to borrow externally, the Treasury has leaned heavily on domestic resources to finance its programmes — a strategy that has often stretched fiscal capacity and created tensions between ambitious development plans and limited revenues.

Economists note that while government investment in infrastructure projects — including roads, dams, and power stations — has stimulated short-term growth, the compressed timelines and heavy spending have frequently led to fiscal slippages.

Despite these pressures, the IMF mission acknowledged notable improvements in fiscal management and inflation control, highlighting efforts by authorities to stabilize the exchange rate and strengthen coordination between fiscal and monetary policies.

“In the context of the requested Staff Monitored Program, IMF staff stand ready to resume discussions upon progress towards addressing key policy issues highlighted in the Article IV consultations, including aligning the 2026 budget with the objective of sustaining macroeconomic stability,” Maliszewski said.

The IMF delegation held what it described as “productive discussions” with Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube, Reserve Bank of Zimbabwe Governor Dr John Mushayavanhu, and other senior officials. Talks focused on the 2026 budget framework, debt management, and policy coordination.

The Fund also commended the government for maintaining an open and constructive dialogue, reflecting a thaw in relations after years of strained engagement.

“The IMF team wishes to express its sincere appreciation to the Zimbabwean authorities and all counterparts for their warm hospitality, open dialogue, and excellent cooperation throughout the mission,” Maliszewski said.

Economists view the IMF’s endorsement as a symbolic but significant vote of confidence in Zimbabwe’s reform trajectory. The proposed Staff Monitored Programme (SMP), they say, could serve as a critical bridge to full re-engagement with international lenders — a necessary step toward debt relief, external financing, and restored investor confidence.

“An SMP would help Zimbabwe demonstrate consistency and transparency in implementing economic reforms,” said another economist. “If successfully implemented, it could pave the way for the country’s return to international capital markets.”

Still, the IMF’s praise is tempered by a stern caveat: Zimbabwe’s recovery will hold only if authorities enforce credible fiscal planning, restrain expenditure growth, and honour reform commitments. Without these, analysts warn, the recent stability in inflation and the exchange rate could quickly unravel.

The IMF team is expected to return to Harare in 2026 to continue technical discussions on the proposed Staff Monitored Programme, which is seen as part of a broader strategy to anchor Zimbabwe’s sustainable macroeconomic recovery and debt resolution.