- IMF Management has approved the completion of the first review under Zimbabwe’s 10‑month Staff-Monitored Program (SMP).
- Program implementation through end-March 2026 was strong, with all quantitative targets and structural benchmarks met and most indicative targets observed.
- Sustained policy discipline, stronger fiscal risk management, protection of social spending, continued monetary and exchange rate reforms, and governance improvements will be important to entrench macroeconomic stability and advance Zimbabwe’s re-engagement efforts.
IMF Management has approved the completion of the first review under Zimbabwe’s 10‑month Staff-Monitored Program (SMP). Completion of the review marks an important step in consolidating recent stabilization gains and strengthening Zimbabwe’s track record of policy implementation in support of arrears clearance, debt restructuring, and re-engagement with the international community.
Zimbabwe’s economy has remained resilient despite a more challenging external environment. Growth remained strong in 2025 at 8.3 percent and continued into early 2026, supported by improved agricultural production, robust mining activity, and favorable gold prices. Inflation has remained low, reflecting tight monetary conditions and relative exchange rate stability.
The outlook remains favorable, but risks are tilted to the downside. Growth is projected at 5 percent in 2026 and 4.2 percent over the medium term, while inflation should remain in single digits under tight policies. The current account surplus is projected to narrow but remain robust. Downside risks stem from a major El Niño event and a renewed war in the Middle East.
Program implementation was strong. All end-March quantitative targets were met, including those relating to the primary budget balance, net international reserves, Reserve Bank of Zimbabwe credit to the non-financial public sector, external borrowing, and monetary base growth. Most indicative targets were observed, although the indicative target on protected social and priority spending was missed. The end-March and end-June structural benchmarks were completed, and the authorities are making progress toward subsequent reform commitments.
The program continues to support prudent fiscal management. The fiscal primary balance through end-March was stronger than expected, supported by robust revenue collection. The program supports the authorities’ commitment to maintain spending within the approved 2026 national budget, while saving additional revenues to build buffers for potential food-security needs in 2027. The program also supports commitments to contain fiscal risks from gold delivery incentives, a rules-based approach to early redemptions and other liability-management operations, and stronger safeguards for domestic arrears clearance. Strengthening budget execution, commitment controls, public financial management, and domestic arrears clearance will be critical to preventing new arrears and safeguarding fiscal credibility.
The Reserve Bank of Zimbabwe has maintained a tight monetary policy stance to contain inflation and reduce pressures in the foreign exchange market. This stance should continue until inflation expectations are firmly anchored and confidence in the local currency strengthens. Staff welcomes the operationalization of the ZiG-denominated term deposit facility as part of a gradual shift toward more market-based instruments. Over time, reducing reliance on non-negotiable certificates of deposit would help strengthen monetary transmission and support domestic money market development. Staff also welcomes the authorities’ plans to develop a comprehensive strategy to further liberalize the foreign exchange market and reform the foreign exchange intervention framework.
Structural reforms remain central to the program’s objectives. Staff welcomes the authorities’ commitment to strengthening social protection systems, while the missed indicative target on protected social and priority spending underscores the need to improve budget execution and ensure timely support to vulnerable groups. Continued progress in public financial management, governance, and fiscal risk management will also be important to reinforce transparency, accountability, and confidence in the authorities’ policy framework.
The program also supports the authorities’ broader re-engagement agenda. Continued progress under the SMP, together with ongoing efforts to reconcile debt data and develop a credible arrears-clearance and debt-resolution strategy, will help advance discussions with external partners and support the next stages of Zimbabwe’s re-engagement process.
Distributed by APO Group on behalf of International Monetary Fund (IMF).
