- IMF Management has approved the completion of the second review under Zimbabwe's 10-month Staff-Monitored Program (SMP).
- Program implementation through end-June 2026 was strong. All quantitative targets and structural benchmarks were met, as were all indicative targets except the floor on protected social and priority spending.
- Sustained fiscal and monetary discipline, stronger budget execution and fiscal governance, timely implementation of protected social spending, and continued monetary and foreign exchange market reforms will be important to preserve macroeconomic stability and advance Zimbabwe's re-engagement efforts.
Washington, DC: IMF Management has approved the completion of the second review under Zimbabwe's 10-month Staff-Monitored Program (SMP). Completion of the review reflects continued progress in consolidating macroeconomic stability and strengthening Zimbabwe's track record of policy implementation in support of arrears clearance, debt resolution, and re-engagement with the international community.
Zimbabwe's economy has remained resilient. Economic activity continued to expand during the first half of 2026, while annual ZiG inflation remained in the low single digits, at 3.7 percent in September. The exchange rate remained broadly stable, and the external position benefited from strong mineral exports, favorable commodity prices, and resilient remittance inflows. Fiscal revenue also exceeded expectations, contributing to a stronger-than-programmed primary balance.
The economic outlook for 2026 remains favorable. Real GDP growth is projected at 5 percent, inflation is expected to remain in single digits, and the current account is projected to remain in surplus. Growth is projected to slow to 3.5 percent in 2027, reflecting the anticipated effects of an El Niño-related drought on agricultural production, before recovering in 2028. Risks remain tilted to the downside, particularly from a more severe drought and renewed commodity and energy price pressures.
Program implementation through end-June was strong. All end-June quantitative targets, structural benchmarks, and continuous commitments were met. All indicative targets were observed except the floor on protected social and priority spending, reflecting persistent implementation bottlenecks affecting key programs.
Fiscal policy should continue to preserve stability while strengthening resilience to shocks. Stronger-than-expected revenue provides an opportunity to build fiscal buffers and prepare for potential food-security and energy-related pressures. The 2027 Budget should be anchored in prudent revenue and financing assumptions to avoid creating a structural fiscal deficit, while providing adequate space for priority social spending and high-impact development expenditure. Stronger expenditure controls, cash planning, public financial management, and transparent liability-management operations will be central to improving budget credibility, preventing new arrears, and translating favorable revenue performance into durable fiscal gains.
Timely execution of protected social and priority spending remains essential. Staff welcomes the authorities' adoption of a program-by-program financing and execution plan for the remainder of the SMP. Effective implementation will be important to address persistent bottlenecks, improve execution of priority programs, and ensure that macroeconomic stabilization delivers tangible benefits to vulnerable groups.
The Reserve Bank of Zimbabwe has maintained an appropriately tight monetary policy stance, supporting low inflation and exchange rate stability. This stance should be maintained while the authorities continue strengthening liquidity management and developing market-based monetary instruments. Staff welcomes progress toward introducing a more transparent foreign exchange trading platform and preparing a comprehensive strategy for a gradual and properly sequenced transition toward a more market-based foreign exchange system.
Governance reforms and stronger oversight of Mutapa and other state-owned enterprises will remain important to contain fiscal risks and sustain confidence. Continued adherence to borrowing controls for Mutapa and its subsidiaries, publication of audited financial statements, and more systematic monitoring and disclosure of state-owned enterprise financial health will help limit the buildup of direct and contingent liabilities. Finalizing and publishing the anti-corruption strategy, supported by a clear policy matrix, will further strengthen economic governance and accountability.
The SMP is helping strengthen Zimbabwe's track record and support its broader re-engagement agenda. Continued implementation of the remaining program commitments, together with further progress in reconciling debt data and developing a credible and fully financed approach to arrears clearance and debt resolution, will help build further momentum in discussions with creditors and development partners.
