HARARE – Zimbabwe has moved a step closer to restoring relations with international financial institutions after the International Monetary Fund reached a staff-level agreement with the government on the first review of its 10-month Staff-Monitored Programme (SMP), signalling growing confidence in the country’s macroeconomic stabilisation efforts and reform agenda.
The agreement, which remains subject to approval by IMF management, is widely viewed as an important milestone in Zimbabwe’s long-running efforts to normalise relations with international lenders, clear external debt arrears and eventually regain access to concessional financing after more than two decades of financial isolation.
An IMF mission led by Wojciech Maliszewski visited Harare from June 9 to 18 to assess implementation of the programme and hold consultations with government officials, the Reserve Bank of Zimbabwe, and other stakeholders.
Unlike conventional IMF lending programmes, the Staff-Monitored Programme does not provide financial assistance. Instead, it serves as a policy credibility framework under which a country’s economic reforms are monitored against agreed fiscal, monetary and structural benchmarks. Successful implementation is often regarded by international investors and creditors as evidence of policy discipline and institutional commitment, laying the groundwork for future financial support, debt restructuring and broader economic re-engagement.
For Zimbabwe, the agreement carries significance well beyond the programme itself. It represents an external endorsement of the country’s recent macroeconomic reforms at a time when authorities are seeking to restore confidence in the domestic currency, attract foreign investment and strengthen fiscal credibility.
The IMF said implementation of the programme through the end of March had been broadly satisfactory, with Zimbabwe meeting all quantitative performance targets. These included commitments relating to the primary fiscal balance, accumulation of net international reserves, limits on central bank financing of government, restraint on non-concessional external borrowing and growth of the ZiG monetary base.
The Fund noted only one area of underperformance: protected social and priority spending fell short of agreed targets, underscoring the need for more effective budget execution and stronger protection of vulnerable households during the reform process.
The assessment suggests that Zimbabwe has maintained relatively disciplined macroeconomic management despite continuing external uncertainties.
Economic activity has remained resilient following the strong rebound recorded last year. The IMF estimates Zimbabwe’s economy expanded by 8.3% in 2025, driven by improved agricultural output following favourable rainfall, continued expansion in mining production and historically strong international gold prices.
While growth is expected to moderate as the economy normalises, the IMF projects real gross domestic product growth of around 5% in 2026, easing further to approximately 4.2% in 2027 under its baseline outlook.
Although these figures represent slower growth than the previous year, economists note they remain comparatively robust within the Southern African region and indicate that Zimbabwe has largely transitioned from post-drought recovery to more sustainable medium-term expansion.
The Fund also highlighted continued progress in restoring price stability, one of the government’s principal economic objectives following years of monetary instability.
Consumer inflation is projected to average around 5.1% during 2026, reflecting tighter monetary policy, slower expansion of the money supply and greater exchange rate stability despite rising international energy prices and broader global inflationary pressures.
For Zimbabwe, where inflation and currency volatility have historically undermined business confidence and long-term investment planning, sustained low inflation represents an important institutional achievement.
The relative stability of the ZiG, introduced as part of Zimbabwe’s latest monetary reforms, has become one of the central indicators closely monitored by both domestic businesses and international financial institutions.
Economists argue that maintaining confidence in the local currency will require continued fiscal discipline, accumulation of foreign exchange reserves and consistent monetary policy implementation rather than reliance on administrative interventions.
The IMF’s positive assessment is therefore likely to strengthen confidence in Zimbabwe’s ongoing currency reform strategy while providing additional credibility to the authorities’ broader objective of eventually restoring a stable mono-currency system.
Fiscal policy also received favourable assessment.
The IMF noted that government revenue collection exceeded expectations during the first quarter, while expenditure remained broadly aligned with the approved national budget. The authorities were commended for their commitment to saving surplus revenues rather than increasing discretionary spending, thereby creating fiscal buffers that could be deployed should food security pressures emerge during the 2027 agricultural season.
Such fiscal restraint represents a significant departure from previous periods when expenditure overruns and quasi-fiscal operations frequently undermined macroeconomic stability.
Analysts say sustained fiscal discipline will remain essential if Zimbabwe is to strengthen investor confidence, preserve monetary stability and rebuild credibility with international creditors.
Despite the encouraging progress, the IMF cautioned that substantial risks remain.
Among the principal downside threats identified were the possibility of another El Niño weather event affecting agricultural production, together with continued geopolitical uncertainty stemming from conflict in the Middle East, which could disrupt global energy markets, increase imported inflation and weaken external demand.
Should adverse weather conditions significantly reduce agricultural output, economic growth could slow to between 2% and 3%, according to the IMF’s downside scenario.
Zimbabwe’s dependence on agriculture continues to expose the economy to climatic variability despite ongoing efforts to diversify through mining, manufacturing and services.
Nevertheless, the country’s external position remains comparatively favourable.
The IMF expects Zimbabwe to continue recording a current account surplus, supported by strong mineral exports, agricultural earnings and resilient diaspora remittance inflows, which remain among the country’s largest sources of foreign currency.
Gold exports, together with growing lithium production, continue to underpin foreign exchange receipts, while remittances provide important support to household consumption and domestic demand.
For financial markets, however, the greatest significance of the staff-level agreement lies in its implications for Zimbabwe’s international financial reintegration.
Successful completion of the Staff-Monitored Programme is widely regarded as an essential precursor to eventual arrears clearance with multilateral creditors, including the IMF, the World Bank and the African Development Bank.
Progress under the programme could also strengthen Zimbabwe’s case for future concessional financing and improve perceptions among international investors considering long-term investments in mining, infrastructure, manufacturing and financial services.
While the programme does not itself unlock new funding, it serves as an important signal that Zimbabwe’s economic policies are increasingly aligning with internationally recognised standards of macroeconomic management.
The challenge now facing policymakers is sustaining reform momentum beyond programme implementation.
Maintaining currency stability, strengthening institutional credibility, broadening the tax base, improving public expenditure efficiency and accelerating structural reforms will determine whether recent macroeconomic gains evolve into durable long-term economic transformation.
The IMF’s latest assessment suggests Zimbabwe has made meaningful progress towards restoring macroeconomic stability. The more difficult task now lies in translating that stability into sustained investment, higher productivity, stronger industrial growth and lasting improvements in living standards.
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