HARARE – The International Monetary Fund (IMF) has released its 2025 Article IV consultation report on Zimbabwe, highlighting a tentative macroeconomic stabilisation in the country despite significant fiscal and structural challenges that need to be resolved.
Economic growth rebounded to an estimated 6 percent in 2025 from a sharp slowdown to 1.7 percent in 2024, supported by improved rainfall, record-high gold prices, and robust remittance inflows.
Fiscal financing pressures, however, persist, with increased spending needs, negative net external financing, and substantial domestic expenditure arrears estimated at nearly US$600 million in 2024.
The report noted that tighter monetary policies introduced by the Reserve Bank of Zimbabwe (RBZ), including halting monetary financing of government debt, raising reserve requirements, and increasing policy interest rates, have contributed to reducing inflation and stabilizing exchange rates.
Monthly inflation dropped to 0.3 percent by June 2025. Yet, Zimbabwe’s newly introduced local currency, the Zimbabwe Gold (ZiG), remained weakly monetised, and high dollarisation and a persistent gap between official and parallel exchange rates undermine policy effectiveness.
Fiscal challenges derive from higher public sector wages, capital outlays related to hosting regional summits, and debt servicing, including debts taken over from the RBZ and assets acquired by the Mutapa Investment Fund.
These pressures constrain fiscal space, leading to the accumulation of arrears and reliance on domestic financing methods that expanded the monetary base sharply in 2024.
The Executive Board of the IMF stressed the need for a comprehensive reform agenda focused on restoring fiscal discipline, improving monetary policy credibility, enhancing governance, and advancing structural reforms to boost economic growth and reduce vulnerabilities.
“Directors stressed that a tighter fiscal stance is needed to close the fiscal financing gap, prevent further accumulation of domestic arrears, and preclude a return to monetary financing.
“They agreed that adjustment should include both revenue and spending measures, notably to rationalize tax incentives, address tax administration weaknesses, and to reduce spending, particularly on the public compensation bill, while protecting targeted social spending and public investment.
“Directors emphasized the need to strengthen public financial management to support durable adjustment, and to strengthen the governance framework for the Mutapa Investment Fund to help control fiscal risks,” read part of the report.
Looking ahead, the IMF is projecting growth to moderate to around 3.5 percent in the medium term due to fiscal pressures and low confidence in macroeconomic stability. Inflation is expected to remain low if tight monetary policy is maintained.
The organisation said external positions remained vulnerable with foreign reserves covering less than one month of imports by mid-2025, despite a widening current account surplus owed to strong mining exports and remittances.
According to the IMF, Zimbabwe’s authorities have committed to these reforms under a national development strategy and have embarked on a structured dialogue platform with international creditors aimed at debt resolution and arrears clearance to regain access to concessional financing.
The report emphasised that addressing fiscal financing gaps without resorting to monetary financing, strengthening public financial management, and further liberalising the foreign exchange market are critical to sustaining macroeconomic stability and fostering private sector growth.
Structural reforms targeting business regulations, credit markets, and governance are seen as vital to unlocking Zimbabwe’s growth potential and improving living standards.
Zimbabwe faces medium- to long-term risks including climate change impacts, external shocks from commodity price volatility, geopolitical fragmentation, and delayed international re-engagement.
The report has called for accelerated reform implementation and international support to mitigate these risks and support the country’s path to sustainable economic stability and growth.
This 2025 Article IV consultation was based on discussions held up to mid-2025 and reflected the latest available economic data and policy developments in Zimbabwe.
