Online Reporter
Zimpapers Writer
ZIMBABWE’S economy is expected to grow by six percent this year, buoyed by a strong agricultural season, record-high gold prices and sustained remittance inflows, according to the International Monetary Fund (IMF).
In its 2025 Article IV Consultation Report released on Friday, the IMF said growth would rebound from last year’s slowdown as extreme weather shocks eased and terms-of-trade improved, but warned that without deeper reforms, momentum would weaken in the medium term, with GDP growth slowing to about 3,5 percent.
IMF noted that tighter monetary policies — including the halting of quasi-fiscal operations and monetary financing by the Reserve Bank of Zimbabwe (RBZ) — had helped reduce inflation and ease exchange rate pressures.
Inflation is projected to remain relatively low this year, underpinned by tight liquidity management and ongoing efforts to stabilise the Zimbabwe Gold (ZiG) currency.
“GDP growth is expected to rebound to six percent this year and the current account surplus to widen, both driven by a good agricultural season, record-high gold prices and sustained remittances inflows,” the report said.
“The projections assume that the RBZ remains committed to stabilising the ZiG and keeping inflation relatively low, while building up reserves from continued current account surpluses and gold royalties remitted to the RBZ.
“But, without a decisive fiscal adjustment, growth is expected to slow to 3,5 percent in the medium-term, as confidence in the durability of macroeconomic stability remains low, and fiscal financing needs crowd out private sector credit and investment, and domestic arrears continue to build up.”
The IMF cautioned that significant risks remain, including elevated parallel exchange rate premiums, uncertainty over the path towards a mono-currency system, limited foreign reserves and persistent fiscal financing pressures that continue to crowd out private sector credit and investment.
The Fund urged authorities to implement a comprehensive reform package anchored on repairing structural weaknesses in public finances to secure fiscal discipline and enhance the effectiveness and coherence of monetary and exchange rate policy.
On the fiscal side, the IMF recommended rationalising generous corporate tax incentives, strengthening tax administration and addressing spending pressures, particularly the public wage bill, while creating room for targeted social spending.
It also underscored the need for stronger planning and political commitment to prevent further arrears accumulation.
“A degree of macroeconomic stability has been maintained recently. Tighter policies — notably the halting of quasi-fiscal operations and monetary financing by the central bank — have helped significantly reduce inflation and exchange rate pressures,” said the multilateral lender.
“Growth is expected to recover but to remain subdued in the medium-term, amid low inflation.”
The IMF also recommended a stronger governance framework for the Mutapa Investment Fund saying strengthened governance framework remains key for controlling fiscal risks.
“Priorities include amending applicable legal provisions to clarify Mutapa’s mandate, integrating it into the budget process, and ensuring adherence to highest standards of corporate accountability and transparency through appropriate oversight disclosure and publication of audited financial statements,” said IMF.
On the monetary front, the Fund encouraged Zimbabwe to move towards a transparent market-based foreign exchange system, with the exchange rate determined by market conditions, and reduced RBZ intervention.
It also urged reforms to strengthen liquidity management, improve the role of the local currency, the ZiG, and provide clarity on the mono-currency transition plan.
