Treasury scrambles to meet IMF demands

LIVINGSTONE MARUFU

Treasury is racing to implement sweeping fiscal and monetary reforms demanded by the International Monetary Fund (IMF), a Bretton Woods institution which oversees the international monetary system,  as it seeks to exit debt distress, restore international confidence, and unlock access to concessional financing.

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said government is pressing ahead with critical policy measures agreed during an IMF technical mission in June, a clear signal that Harare is eager to secure a Staff Monitored Programme (SMP), a critical precursor to broader debt restructuring and re-engagement with international creditors.

“Government will continue implementing the policy measures which were agreed and concluded during the June 2025 IMF Mission,” Ncube said.

Among the reforms currently underway are efforts to plug the 2025 fiscal financing gap, improve transparency in the management of public finances, strengthen oversight of state-owned enterprises, institutionalise domestic arrears reporting, and operationalise a rules-based monetary policy framework to anchor price stability.

Treasury is also moving to enhance the functionality and transparency of the willing-buyer, willing-seller foreign exchange mechanism—a critical intervention in light of persistent currency instability.

In parallel, work is being finalised on the operational manuals for the Zimbabwe Social Registry, a tool aimed at better targeting social protection programmes and improving the efficiency of public sector interventions.

These reforms form the backbone of Zimbabwe’s broader re-engagement and arrears clearance strategy, as the government attempts to rebuild trust following two decades of economic isolation stemming from governance failures, sanctions, and ballooning debt arrears.

“Zimbabwe’s debt distress situation is a structural barrier to Zimbabwe’s inclusive and sustainable economic growth agenda,” Professor Ncube acknowledged.

To address this legacy burden, the Ministry of Finance is implementing the Arrears Clearance and Debt Resolution Roadmap through the Structured Dialogue Platform Process (SDPP), a domestically developed mechanism that aligns with the national development strategy, NDS1 (2021–2025), and the forthcoming NDS2 (2026–2030).

At the heart of this roadmap lie three strategic pillars: macroeconomic stability and growth, improved governance, and comprehensive land reforms.

This includes enhancing the bankability of 99-year leases, compensating dispossessed former commercial farmers, and settling outstanding obligations under Bilateral Investment Promotion and Protection Agreements (BIPPAs).

“Significant progress has been achieved in implementing the reforms under the three strategic pillars, with the economy experiencing macroeconomic stability,” Professor Ncube said.

To underscore its commitment, Zimbabwe has formally requested an SMP with the IMF. While the SMP does not provide financial support, it allows IMF staff to closely monitor reform implementation and assess the government’s policy credibility, paving the way for possible debt relief discussions and eventual access to new concessional financing.

“In order to establish a track record of implementing sound economic reforms, Government requested a Staff Monitored Programme with the IMF,” Professor Ncube said.

“Discussions with the IMF have been ongoing and are continuing, with a target to agree on all the prior actions, quantitative targets and structural benchmarks in the coming months.”

However, despite the reform momentum, some business leaders and analysts remain cautious, warning that success will ultimately be measured by delivery, not declarations.

“We are happy with the current reforms, but more should be done to transform State owned entities (SOEs), pay former farm owners and make land bankable,” said Zimbabwe National Chamber of Commerce (ZNCC) CEO, Christopher Mugaga.

“The private sector is keen to see measurable progress.”

Veteran economist Eddie Cross welcomed the IMF recommendations and urged the government to accelerate their implementation.

“The prescriptions of the IMF resulting from a recent visit all made complete sense, and would in fact lead to increased stability for the currency and the economy in a wider sense,” Cross said.

“I would hope that the Finance Minister (Professor Mthuli Ncube) would take their suggestions seriously and implement as soon as possible—and that makes sense. This is what most of us have been saying for some time.”

Cross said re-establishing currency credibility was a key priority.

“What is necessary is that the authorities float the currency so that the market establishes the real value and then build confidence so that we can revert to our own local currency for domestic trading activities. We can start using the US$ for what it is really intended to do, especially for financing imports and investments.”

Monetary Policy Committee member and economist Persistence Gwanyanya said while reform progress has been made, several structural gaps remain.

“We have progressed well since we embarked on the reforms agenda. We have achieved the liberalisation of the exchange rate and managed to transfer all fiscal duties and debts to the Treasury,” Gwanyanya said. “However, IMF raised concerns about the central bank’s involvement in the exchange rate and that process has to be accelerated to meet the IFIs’ requirements.”

He also flagged the need for deeper institutional alignment to support the reforms: “We have made strides from where we were but a lot of work needs to be done to make ZiG a sole currency. That’s the area where the country needs to move with pace to achieve that.”

“There should be coordination and congruence between the fiscal and monetary authorities to satisfy the necessary reform requirements,” Gwanyanya added.

With limited fiscal space, constrained foreign inflows, and a battered sovereign credit profile, the stakes for Treasury could not be higher.

A successful SMP and follow-through on reforms could unlock significant goodwill from international creditors, but failure to deliver could once again isolate Zimbabwe from global capital.

As the country stands at a crucial crossroads, the reform agenda remains both its lifeline and its litmus test.