- IMF Completes Zimbabwe Programme Review but Flags Shortfall in Protected Social Spending
The International Monetary Fund’s management has approved the second review of Zimbabwe’s Staff-Monitored Programme after the country met all its principal quantitative and structural reform targets through June 2026.
The assessment strengthens Zimbabwe’s attempt to rebuild credibility with international creditors and development partners, although the IMF identified a significant weakness in the government’s failure to meet its target for protected social and priority expenditure.
Zimbabwe satisfied all quantitative targets, structural benchmarks and continuing commitments under the 10-month programme. It also met every indicative target except the minimum spending requirement for programmes intended to protect vulnerable households.
The IMF attributed the missed target to persistent implementation bottlenecks affecting priority programmes.
“Timely execution of protected social and priority spending remains essential,” the Fund said, adding that the government had adopted a programme-by-programme financing and implementation plan for the remainder of the monitoring arrangement.
The distinction is important. Zimbabwe appears to have delivered the fiscal restraint, revenue collection and tight monetary conditions required to stabilise headline economic indicators. But the shortfall in social expenditure raises questions about whether the benefits of that stabilisation are reaching households facing poverty, food insecurity and weak public services.
The IMF said Zimbabwe’s economy remained resilient during the first half of 2026, supported by mineral exports, favourable commodity prices and remittance inflows.
Real gross domestic product is projected to expand by 5 per cent in 2026, while inflation is expected to remain in single digits. Annual inflation measured in the Zimbabwe Gold currency, or ZiG, stood at 3.7 per cent in September.
The exchange rate remained broadly stable, while stronger-than-expected fiscal revenue helped the government deliver a primary balance above the programme target.
Zimbabwe’s current account is also expected to remain in surplus, providing some support for the currency and the country’s limited external buffers.
The figures represent an improvement for an economy that has experienced repeated currency crises, hyperinflation and long periods of fiscal and monetary instability.
The Reserve Bank of Zimbabwe’s tight monetary stance has been central to the recent stability. The IMF described the policy position as appropriate and urged the authorities to maintain it while strengthening liquidity management and developing market-based monetary instruments.
The Fund also welcomed progress towards introducing a more transparent foreign-exchange trading platform and developing a strategy for a gradual transition to a market-based currency system.
The durability of the ZiG will ultimately depend on more than administrative controls. Confidence will require predictable monetary policy, sufficient reserves, transparent foreign-exchange allocation and a reduction in the gap between official and alternative currency markets.
While fiscal revenue exceeded expectations, the IMF said the government should use the additional resources to build buffers against food-security and energy pressures.
The Fund urged authorities to base the 2027 Budget on prudent revenue and financing assumptions to avoid creating a structural deficit.
It also called for sufficient allocations to protected social programmes and high-impact development spending, alongside stronger expenditure controls, cash planning and public financial management.
The missed social-spending floor exposes one of the central tensions in Zimbabwe’s reform programme. Fiscal consolidation can strengthen macroeconomic stability, but it risks losing public support if essential services and vulnerable households do not receive the resources promised to them.
The IMF said effective implementation of the government’s new spending plan would be necessary to ensure “macroeconomic stabilisation delivers tangible benefits to vulnerable groups”.
Economic growth is projected to slow to 3.5 per cent in 2027 because of the expected effects of an El Niño-related drought on agricultural production. Growth is forecast to recover in 2028.
Risks remain tilted to the downside, particularly if the drought becomes more severe or commodity and energy prices increase again.
Zimbabwe’s Staff-Monitored Programme does not provide IMF financing and does not constitute endorsement by the Fund’s Executive Board. It is an informal arrangement under which IMF staff monitor implementation of the authorities’ economic programme.
Its principal value is therefore reputational. Successful implementation can help Zimbabwe demonstrate that it is capable of meeting agreed policy commitments, a necessary condition for rebuilding relations with creditors.
The IMF said the programme was supporting Zimbabwe’s efforts to clear external arrears, resolve its debt burden and re-engage with the international community.
Further progress will require the reconciliation of debt data and the development of a credible, fully financed strategy for arrears clearance and debt resolution.
Governance at state-owned enterprises is another area of concern. The Fund called for stronger oversight of Mutapa Investment Fund and other public enterprises to prevent the accumulation of direct and contingent liabilities.
It urged continued compliance with borrowing controls, publication of audited financial statements and more systematic disclosure of the financial health of state-owned companies.
The IMF also called for Zimbabwe’s anti-corruption strategy to be completed and published alongside a clear implementation framework.
Completion of the review is an important step for Zimbabwe, but it is not equivalent to restored access to normal international financing.
The country has demonstrated that it can meet programme targets under close monitoring. Its next test is more difficult: converting that discipline into stronger public services, credible debt resolution and a currency system that retains confidence without depending indefinitely on restrictive controls.
For Zimbabweans, the programme’s success will ultimately be judged not by the number of targets cleared, but by whether low inflation, stable exchange rates and stronger revenue produce better living conditions.
