IMF Concludes 2025 Article IV Consultation with Zimbabwe, Warns of Fiscal Pressures Despite Growth Rebound
The Executive Board of the International Monetary Fund (IMF) has concluded the 2025 Article IV consultation with Zimbabwe, with the authorities granting consent for the publication of the accompanying Staff Report.
Despite lingering policy challenges, the Fund noted that Zimbabwe is experiencing a measure of macroeconomic stability following a sharp slowdown in 2024. Economic growth had fallen from 5 percent in 2023 to 1.7 percent in 2024, largely due to severe drought conditions that curtailed agricultural and hydropower output and reduced mining production amid falling global metal prices.
However, growth momentum recovered in the first half of 2025, underpinned by improved climate conditions, record-high gold prices, and strong inflows of workers’ remittances. The economy is now projected to expand by 6 percent in 2025, before moderating to 3.5 percent over the medium term as confidence in the durability of macroeconomic stabilization remains weak.
On the fiscal front, the IMF highlighted intensifying financing pressures. By 2024, Zimbabwe’s net external financing position had turned negative, with the entirety of its SDR allocation previously used for budget support. While revenue collection improved—boosted by reductions in VAT reliefs, new levies, and measures against smuggling—expenditure demands grew on account of rising public wages, capital outlays, and debt servicing obligations, including those related to the Mutapa Investment Fund.
Although the fiscal deficit remained broadly stable between 2023 and 2024, limited financing forced the accumulation of nearly US$600 million in domestic expenditure arrears. Government relied on Treasury bills and direct borrowing from the Reserve Bank of Zimbabwe (RBZ), which fueled an expansion of domestic liquidity. Between April and September 2024, the ZiG monetary base rose by around 215 percent, leading to a sharp depreciation of the currency in September 2024.
In response, the RBZ halted monetary financing of Treasury debt, tightened reserve requirements, and raised the policy rate. These measures slowed monetary expansion and helped stabilize both the official and parallel exchange rates, narrowing the market premium. ZiG inflation subsequently dropped to 0.3 percent in June 2025.
Despite the rebound in growth and a widening current account surplus, the IMF cautioned that Zimbabwe’s foreign reserves remain weak, limiting buffers against external shocks. Risks to the outlook remain tilted to the downside, particularly if monetary financing resumes.
The Fund also underscored Zimbabwe’s ongoing re-engagement with international creditors. Through the Structured Dialogue Platform (SDP), authorities are pursuing reforms across three pillars—economic, governance, and land tenure/farmers’ compensation—as part of efforts to resolve arrears and restore access to concessional financing.
