Treasury eyes next phase of reforms

LIVINGSTONE MARUFU | SAMANTHA MADE | ROBIN PHIRI

Zimbabwe’s economy is showing signs of stabilisation after years of volatility, underpinned by disciplined fiscal and monetary policies and rising export inflows, Finance Minister Professor Mthuli Ncube has  said.

The Treasury is now accelerating regulatory reforms across key sectors to reduce business costs, attract investment, and support a projected 5% economic growth in 2026.

“Macroeconomic stability has been underpinned by the continued implementation of prudent fiscal and tight monetary policy stance,” Ncube said. “Policy rate of 35%, statutory reserve requirements for both local and foreign currency deposits are maintained at 30% for demand and call deposits, and 15% for time and savings deposits. Prudent money supply management through optimum liquidity management and further refinement of open market operations have helped us to stabilise the economy.”

The Treasury’s approach has reined in Zimbabwe Gold (ZiG) inflation and stabilised the exchange rate, cutting the parallel market premium to 30%, down sharply from 130% last year. According to ZIMSTAT, annual inflation averaged 98.6% in 2021, 193.4% in 2022, and 271.7% in 2023, before moderating dramatically under the ZiG regime. By October 2025, monthly inflation had fallen to –0.4%, with annual inflation at 32.7%, and projections suggest it could reach 22.8% by year-end and decline to single digits by 2027.

“Favourable agriculture output has dampened food inflation pressures, while significant foreign currency inflows from exports, particularly tobacco, gold, and platinum, have also eased pressure on the exchange rate,” Ncube said.

Aligned with the National Development Strategy 2 (NDS2), the government is targeting fiscal consolidation in the 2026 budget, aiming to keep the overall budget deficit below 3% of GDP while directing resources to programmes that accelerate economic transformation.

“In 2026, the Government will continue to pursue fiscal consolidation with a focus on attaining the following targets: an overall budget deficit of less than 3% of GDP; ensuring that public resources are directed towards programmes and projects that accelerate economic transformation; and promoting inclusive growth and improving the overall quality of life for citizens,” Ncube said.

The economy expanded in 2024, led by manufacturing, mining, and wholesale trade, while regulatory reforms are reducing the cost of doing business. Manufacturing emerged as the largest contributor to GDP growth, accounting for 15.3%, followed by mining and quarrying at 14.5%. Wholesale and retail trade contributed 11.9%, finance and insurance 10.8%, and agriculture 9.3%. Other notable sectors included education at 4.2% and transport and storage at 3.3%, underscoring the continued diversification of the economy.

By June 2025, Zimbabwe’s public and publicly guaranteed debt stood at US$22.6 billion, representing 43.2% of GDP, with external debt of US$13.7 billion, domestic debt of US$8.8 billion, and external arrears of US$7.7 billion, complicating full re-engagement with international creditors.

The Treasury has launched a 100-Day Accelerator Model, targeting reforms across 12 key sectors, including agriculture, energy, tourism, and manufacturing, to dismantle bureaucratic bottlenecks, reduce compliance costs, and boost investment. Early progress has been recorded in livestock, tourism, transport, and retail, but business leaders caution that overall implementation remains uneven.

Oswell Binha, Chairman of the CEO Africa Roundtable, warned:
“While the government frequently references progress through ZIDA and NDS1, the overall reform trajectory remains painfully slow, fragmented, and largely rhetorical. The business climate continues to be constrained by deep-seated structural and institutional inertia. The reform momentum appears more declaratory than transformative.”

Binha added that despite promises to review fees, licenses, and permits across sectors, minimal demonstrable progress has been made, particularly in the pilot agriculture sector. He said ambiguous property rights, erratic foreign currency repatriation frameworks, and high compliance costs continue to undermine investor confidence.

The Zimbabwe National Chamber of Commerce (ZNCC) has urged the government to accelerate reforms to reduce the cost of doing business and enhance investment, noting that early gains in agriculture must extend to wholesale, retail, manufacturing, and services.

“These reforms represent an important step toward reducing the cost of doing business, enhancing competitiveness, and creating a more enabling environment for investment and innovation. We urge that this momentum be rapidly extended to other sectors,” the ZNCC said.

The Confederation of Zimbabwe Industries (CZI) echoed this call, advocating bold deregulation inspired by Argentina’s model:
“Zimbabwe requires bold and accelerated reforms, including systematic deregulation — maybe one deregulation per week. A sustained rallying call from the Head of State will assist in accelerating the pace of the reforms and maintain momentum in the face of the imminent AfCFTA and current competitiveness pressures.”

The Confederation of Zimbabwe Retailers (CZR) welcomed the consolidation of eleven local authority licenses into a single unified shop license, removal of redundant bottle store licenses, combination of retail and wholesale permits, and the capping of tourism-related business fees at $500.

CZR President Dr. Denford Mutashu said:
“These reforms mark a significant milestone in the Government’s drive to create a competitive, efficient, and business-friendly environment that promotes growth, formalisation, and sustainability within Zimbabwe’s retail and wholesale landscape.”

He urged local authorities to align by-laws with national directives and called on businesses to pass on savings to consumers:
“We call upon all local authorities to immediately align their by-laws and fee structures with the new directives. Businesses must reciprocate government’s efforts by passing on savings through lower prices and better service delivery.”

Mutashu described the reforms as a step toward Vision 2030, which aims to transform Zimbabwe into an upper middle-income economy driven by a vibrant, inclusive private sector.

While monetary and fiscal discipline has brought inflation under control and stabilised the currency, analysts warn the next challenge lies in implementation — translating policy stability into sustained private-sector confidence and investment.

As Zimbabwe prepares its 2026 National Budget, fiscal restraint and reform credibility will determine whether current stability evolves into durable growth or remains a temporary reprieve.