IMF Highlights Zimbabwe’s Economic Resilience In Face Of Challenges

By Judith Matanire

Following a recent visit to Harare, an International Monetary Fund (IMF) team led by Mr. Wojciech Maliszewski concluded the 2024 Article IV Consultation with Zimbabwe. Despite facing significant headwinds, Zimbabwe’s economy has exhibited resilience, according to Maliszewski’s statement.

The IMF projects Zimbabwe’s economic growth to slow to 2 percent in 2024, down from 5.3 percent in 2023, primarily due to a severe El Niño-induced drought and increased import costs impacting the balance of payments. However, a robust recovery to around 6 percent growth is anticipated for 2025, bolstered by agricultural revival and ongoing manufacturing projects.

A pivotal development highlighted was the introduction of the Zimbabwe Gold (ZiG) currency by the Reserve Bank of Zimbabwe (RBZ) in April 2024. This move stabilized the official exchange rate, quelling earlier macroeconomic instability marked by a 260 percent depreciation of the Zimbabwean dollar in early 2024.

Maliszewski emphasized the importance of maintaining macroeconomic stability through disciplined monetary policies. He recommended refining the policy framework, including stabilizing the ZiG against a suitable currency basket dominated by the USD. This would involve managing base money growth through Non-Negotiable Certificates of Deposits (NNCDs) and transitioning to interest-rate-based monetary tools.

The IMF stressed the need to close fiscal financing gaps sustainably, including addressing past debts related to the RBZ’s quasi-fiscal operations. Improved coordination between the RBZ and the Ministry of Finance was also lauded, though challenges in revenue generation and managing drought-related expenditures persist.

Structural reforms targeting business climate enhancement, economic governance, and corruption mitigation were also discussed. The IMF underscored the importance of international reengagement for debt resolution, facilitating access to external financing crucial for economic stability.

The IMF remains engaged in providing technical assistance to Zimbabwe in various critical areas, although financial support hinges on resolving external debt sustainability and arrears. The consultations involved high-level meetings with Zimbabwean officials and stakeholders, reflecting a collaborative effort towards economic reform and stability. *Nhau/Indaba*

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