Source: ‘Mid-term review must consolidate stability’ – herald
Nelson Gahadza
FINANCE, Economic Development and Investment Promotion Minister Professor Mthuli Ncube is expected to present the 2026 Mid-Term Budget and Economic Policy Review on Thursday, with analysts calling for policy continuity rather than sweeping reforms to consolidate macroeconomic stability while advancing structural transformation.
The mid-term policy review comes at a time Zimbabwe’s economy has demonstrated strong resilience despite persistent global uncertainty, geopolitical tensions and a challenging external environment.
Low and steady inflation, a stable Zimbabwe Gold (ZiG) exchange rate, improving fiscal revenues, rising foreign currency inflows and strong performances in agriculture and mining have reinforced confidence that the country’s macroeconomic reform programme remains on track.
Unlike the annual National Budget, the mid-term review serves primarily as an assessment of economic performance during the first half of the year.
It evaluates revenue collections, expenditure patterns, budget execution, fiscal performance and broader economic developments, while updating the Government’s projections for the remainder of the year.
It also provides the Treasury with an opportunity to fine-tune policy where necessary and outline progress in implementing reforms under the National Development Strategy 2 (NDS2).
This year’s review is expected to draw heightened interest from businesses, investors and households seeking clarity on taxation, ease of doing business reforms, transition towards a mono-currency system, investment protection, industrial incentives and measures to sustain economic growth.
Recent economic indicators have generally painted an encouraging picture as inflation has remained in single digits, ZiG has exhibited durable stability, foreign currency receipts have increased significantly and reserves have continued to strengthen.
The Government has consistently maintained that preserving macroeconomic stability remains the cornerstone of NDS2, underpinned by fiscal discipline, exchange rate stability and prudent monetary policy.
Economic analyst Mr Persistence Gwanyanya believes the economic environment leaves little justification for major policy shifts.
Instead, he expects the Treasury to reinforce its existing policy framework while demonstrating how improved fiscal performance will be leveraged to deepen structural reforms.
“The 2026 Mid-Term Fiscal Policy Review occurs against a backdrop of macroeconomic stability and renewed growth momentum, notwithstanding adverse external shocks, notably the geopolitical escalation involving Iran, Israel and the United States,” said Mr Gwanyanya.
“This resilience underscores the effectiveness of current policy frameworks, suggesting that the upcoming review will prioritise policy continuity over structural deviations.”
Mr Gwanyanya said the Government’s fiscal position had strengthened considerably during the first half of the year.
Zimbabwe Revenue Authority (ZIMRA) collections increased by approximately 47 percent during the first five months of 2026, rising from US$2,95 billion over the same period last year to US$4,34 billion.
The stronger revenue performance has largely been driven by improved activity in agriculture and mining, prompting Treasury to revise ZIMRA’s annual revenue target upwards to US$9,2 billion.
Against this backdrop, Mr Gwanyanya believes the Government could also revise the overall 2026 National Budget upwards from its original allocation of US$9,7 billion.
Economic growth has likewise exceeded earlier expectations as Treasury estimates first-half gross domestic product (GDP) growth at 6,8 percent, following an impressive 8,3 percent expansion in 2025, well above the initial target of 6,6 percent.
Mr Gwanyanya believes the market’s focus extends beyond stronger revenue collections and higher growth.
He said businesses want Treasury to clearly articulate how the additional fiscal inflows will be deployed to improve productivity, strengthen competitiveness and enhance the economy’s resilience against future external shocks.
“Policy focus is now shifting towards microeconomic efficiency and improving the business environment,” said Mr Gwanyanya.
“The market expects tangible progress on regulatory reforms, sector reviews and a clear road map outlining how the Government intends to sustain private sector competitiveness.”
Among the key areas under scrutiny is the Government’s ongoing review of business licences, permits, levies and regulatory fees across the economy.
Cabinet recently approved a comprehensive rationalisation exercise aimed at lowering the cost of doing business by eliminating duplication and unnecessary compliance costs.
Analysts expect Prof Ncube to provide a detailed progress update, including implementation timelines.
Investment analyst at Trigrams Investments Mr Wafa Kuchera believes tax policy will be one of the most closely watched aspects of the mid-term review.
While acknowledging the Government’s need to mobilise domestic resources, he argued that the tax regime places excessive pressure on formal businesses and consumers.
“It is difficult to ask the minister to do more in some areas while simultaneously asking him to collect less in taxes, but that is exactly what we are asking him to do,” said Mr Kuchera.
“The Government needs to become more efficient and fiscally creative with what it collects to make the impact of taxes go further.”
Mr Kuchera believes stronger economic growth, rather than additional tax measures, should drive higher revenue collections.
He said Treasury should review taxes that disproportionately burden vulnerable households and compliant businesses.
Among the measures requiring reconsideration, he singled out the intermediated money transfer tax (IMTT), arguing that it should either be abolished or significantly reduced.
According to Mr Kuchera, the tax disproportionately affects businesses and formally employed individuals who rely on the banking system, while having limited impact on the predominantly cash-based informal economy it was intended to capture.
He called for a review of consumption taxes, including value-added tax (VAT) on selected basic commodities and sugar taxes, arguing that targeted tax relief would help ease the cost of living.
Beyond taxation, Mr Kuchera said fiscal policy should play a more active role in strengthening domestic production ahead of Zimbabwe’s planned transition to a mono-currency system.
He said the Government should simultaneously promote exports, reduce import dependence and stimulate demand for locally produced goods.
“As we move towards a mono-currency monetary system, fiscal authorities need to incentivise the use of the local currency while promoting exports and import substitution,” he said.
“This means lowering the cost of doing business, creating more employment opportunities and encouraging formalisation.”
Mr Kuchera urged the Government to continue investing in strategic infrastructure while ensuring extractive industries make greater contributions to environmental rehabilitation and community development.
From a capital markets’ perspective, investment analyst Mr Enock Rukarwa expects investor attention to centre on the future of the Victoria Falls Stock Exchange (VFEX) and the Victoria Falls International Financial Services Centre once Zimbabwe eventually adopts a mono-currency regime.
Although the Government has previously assured investors over the future of VFEX operations, Mr Rukarwa believes greater clarity remains necessary.
“The minister needs to re-emphasise the safeguards that will remain in place after de-dollarisation. What are the safeguards? How do we ensure policy consistency and continuity? How do we protect investors’ funds?” he said.
He said such assurances would be critical in attracting long-term international investment, which depends on predictable and credible policy frameworks.
Mr Rukarwa expects Treasury to revisit taxes affecting financial institutions, particularly banks, given their central role in supporting investment and economic growth.
“There is scope to review the tax burden affecting formal businesses because reducing these costs ultimately improves the ease of doing business across the economy,” he said.
FBC Securities believes the Government should largely maintain its current policy direction.
In its Half-Year 2026 Economic and Stock Market Outlook, the brokerage firm said Zimbabwe entered the second half of the year with stronger macroeconomic fundamentals.
The report cited entrenched disinflation, a relatively stable exchange rate, rising foreign currency inflows and improving international reserves as key anchors supporting economic confidence.
It noted that foreign currency receipts rose to US$10,72 billion during the first half of 2026, up from US$7,25 billion during the corresponding period last year.
At the same time, international reserves increased to US$1,6 billion by the end of June, equivalent to approximately 1,6 months of import cover and more than six times reserve money.
Annual ZiG inflation remained below five percent, ending June at 4,72 percent, prompting the Reserve Bank’s Monetary Policy Committee to reduce the Bank Policy Rate from 35 percent to 30 percent while maintaining a cautious monetary policy stance.
FBC Securities believes these gains provide policymakers with an opportunity to focus on deepening domestic capital markets, accelerating formalisation and improving productivity rather than introducing major policy changes.
The brokerage firm expects mining and agriculture to remain the principal drivers of Zimbabwe’s projected five percent economic growth in 2026, supported by favourable commodity prices, stronger tobacco exports and resilient diaspora remittances.
Economist Mr Eddie Cross expects policy continuity.
Beyond reviewing macroeconomic performance, analysts expect Minister Ncube to provide updates on a range of reforms underway, including efforts to broaden the tax base through improved registration and compliance within the informal sector.