Online Reporter
Oliver Kazunga
Senior Reporter
TREASURY is set for a major revenue windfall, with collections projected to hit a record US$10,3 billion this year, giving the Government fresh fiscal space to fund priorities and build a US$275 million cash buffer.
The windfall, driven by stronger economic activity and improved tax administration, is substantially above the International Monetary Fund (IMF) programme projection and the original 2026 national Budget estimate, signalling stronger-than-expected economic performance.
In its first review under the Staff-Monitored Programme released last week, the IMF said the revenue surge would allow Government to raise spending to the original budgeted level of US$9,5 billion while still building a substantial cash cushion.
“Revenue is projected to reach US$10,3 billion (16 percent of GDP), significantly above the programme projection and the original budget.
“This largely reflects overperformance through April and conservatively predicts modest gains in the remainder of the year,” the IMF said.
The revenue windfall provides Government with room to strengthen fiscal buffers at a time when the country faces heightened risks from a potentially severe El Niño, the Middle East conflict, higher energy costs and possible disruptions to food and fertiliser supplies.
The IMF advised that the stronger revenue outturn should not simply translate into additional spending, but should be used to prepare for shocks that could hit the economy next year.
“Even after assuming increased private grains imports, (IMF) staff estimate that building a fiscal buffer of at least US$275 million from the stronger 2026 outturn—alongside conservative planning for the 2027 budget—would allow the authorities to respond quickly to food-security needs while avoiding arrears and protecting priority social spending,” it said.
The revenue performance has already outstripped expectations, with first-quarter collections exceeding the programme target by about US$560 million.
The IMF attributed the strong showing to stronger economic activity — buoyant Value Added Tax and customs duties — higher personal income tax following public wage increases, a smaller-than-expected impact from reduced business fees on non-tax revenues, and continued improvements in tax administration.
The revenue boom comes as Zimbabwe’s economy continues to recover strongly, with real GDP expanding by 8,3 percent last year, up from 1,7 percent in 2024.
Mining, particularly gold mining, remained a major growth driver, while agriculture rebounded following the 2024 drought.
The positive momentum has continued into 2026, with gold production increasing, tobacco recording a bumper season and tourism activity remaining resilient despite global disruptions.
The IMF expects the economy to grow by five percent this year, although growth is projected to moderate to 4,2 percent thereafter.
However, the revenue windfall is emerging at a critical time for the Treasury, with the IMF forecasting that a stronger-than-expected 2026/27 El Niño could reduce economic growth, cut Government revenues and increase spending pressures.
“The materialisation of these risks could halve projected 2027 growth, reduce revenues, and increase government spending to procure grains to protect vulnerable households,” said the fund.
Therefore, the IMF proposed that part of the additional revenue be saved rather than immediately spent, with a new quarterly target setting a floor on Government deposits at the Reserve Bank of Zimbabwe and commercial banks.
It is believed that the framework would allow the authorities to accommodate strategic grain purchases if food prices or availability come under pressure.
The stronger revenue position could also help Zimbabwe tackle its long-standing expenditure arrears, estimated at US$1,7 billion, while supporting debt-management efforts.
The IMF said higher revenues, together with the cash buffer and efforts to reprofile external debt, should help close the previously projected financing gap and support the planned clearance of past expenditure arrears through 2030.
The multilateral institution estimates that Zimbabwe’s total public and publicly guaranteed debt was US$22,7 billion at the end of 2025, while external public debt stood at US$15,2 billion, with more than half of it in arrears to external official creditors.
Despite the debt burden, the IMF said Zimbabwe’s strong programme performance and improved fiscal position were helping strengthen the country’s economic reform credentials.
And for Treasury, the US$10,3 billion revenue projection marks a significant shift in the fiscal outlook; creating an opportunity to fund the national budget, build reserves and prepare for future shocks without returning to the arrears accumulation that has constrained Government in the past.
