IMF Article IV Report raises Zimbabwe’s economic recovery prospects, urges structural reforms

Harare, July 2025 — Zimbabwe is showing early signs of economic recovery and macroeconomic stability, thanks to recent policy reforms and more disciplined fiscal management, according to the latest International Monetary Fund (IMF) Article IV Consultation conducted in Harare from June 4 to 18, 2025.

The IMF mission, led by Wojciech Maliszewski, acknowledged the efforts by Zimbabwean authorities to stabilize the economy after years of hyperinflation and currency volatility.

The report noted that the introduction of the ZiG currency, alongside tightened monetary policy and the cessation of quasi-fiscal operations by the Reserve Bank of Zimbabwe (RBZ), helped curb inflation and stabilize the exchange rate.

Economic Growth Rebounds. The IMF projects Zimbabwe’s real GDP growth at 6% in 2025, rebounding from a sharp contraction in 2024 caused by drought-induced agricultural losses and lower mineral prices.

Improved climate conditions and robust global gold prices have bolstered agriculture and mining, thereby enhancing the current account and domestic economic activity.

Revenue Mobilization and Fiscal Pressures.

Government revenue rose to 18% of GDP, aided by reduced VAT reliefs, new taxes, and efforts to curb smuggling.

However, the IMF raised concerns about persistent fiscal pressures, including rising wage costs, debt service from RBZ’s past operations, infrastructure spending linked to the SADC summit, and Mutapa Investment Fund liabilities.

Zimbabwe’s fiscal deficit widened, financed by Treasury bill issuances and borrowing from the RBZ overdraft window.

This fueled domestic liquidity growth and contributed to the September 2024 overnight drop in the ZiG, triggering inflationary spikes and the accumulation of arrears.

Inflation and Exchange Rate Stabilization.

Inflation, which spiked after the ZiG’s devaluation in late 2024, has since stabilized. Between February and May 2025, monthly inflation averaged just 0.5%, while the gap between official and parallel exchange rates narrowed to around 20%.

The IMF welcomed the repeal of Statutory Instrument 81A, which had mandated the use of the official exchange rate in formal pricing, encouraging informal activity and increasing dollarization.

Key IMF Recommendations.
1. Fiscal Reforms:
Close the 2025 financing gap without relying on inflationary borrowing.
Control spending with stronger political will and planning.
Avoid arrears through public finance audits and enhanced expenditure commitment controls.
Use the 2026 Budget to demonstrate credibility and commitment to fiscal discipline.

1. Monetary and FX Reforms:
   Improve the willing-buyer willing-seller (WBWS) market transparency.
   Gradually remove surrender requirements in favor of direct market conversions.
   Introduce indirect monetary instruments and a deposit facility at RBZ.

Move toward eliminating exchange restrictions under Article VIII obligations.

1. Governance of the Mutapa Investment Fund & SOEs:
   Strengthen oversight, auditing, and reporting frameworks in line with international standards.
   Enhance public sector transparency to reduce fiscal risks.

2. Mono-Currency Transition by 2030:
   The authorities’ plan to transition to an exclusive ZiG-based monetary system by 2030 requires clear communication. The IMF emphasized that such a transition should only apply to domestic transactions and should not eliminate dual-currency banking, to preserve financial intermediation confidence.

International Engagement and IMF Support.
The IMF reiterated that it cannot offer financial support to Zimbabwe at present due to unsustainable debt levels and external arrears. Any financial assistance would require:
A credible external debt restructuring plan,
Arrears clearance, and
A consistent reform path to restore macroeconomic stability, reduce poverty, and strengthen governance.

Nevertheless, the IMF continues to engage actively with Zimbabwe, providing technical assistance and policy advice in areas including tax reform, financial supervision, debt management, and macroeconomic statistics.

The IMF team held extensive meetings with President Emmerson Mnangagwa, Finance Minister Professor Mthuli Ncube, RBZ Governor Dr. John Mushayavanhu, Parliamentarians, civil society, private sector leaders, and development partners.

“Zimbabwe’s economic outlook is improving, but long-term stability hinges on deeper reforms, improved fiscal discipline, and enhanced governance,” the IMF concluded. “We commend the authorities’ efforts and remain ready to support their reform agenda.”

Source: IMF Communications Department
Date: July 2025
Report Reference: 2025 Article IV Consultation – Zimbabwe