Zimbabwe has reached a staff-level agreement with the International Monetary Fund (IMF) following the first review of its 10-month Staff Monitored Programme (SMP), after meeting almost all reform commitments set for the period ending March 2026.
The agreement, announced by the IMF on Tuesday after a mission to Harare last month, represents another step in Zimbabwe’s efforts to restore macroeconomic stability, rebuild confidence and advance its long-standing arrears clearance and debt restructuring agenda.
The agreement still requires approval by IMF management before it becomes effective.
In a statement, IMF mission chief Wojciech Maliszewski said implementation of the programme had remained on course.
“Completion of the review marks an important step in consolidating recent stabilisation gains and building a track record toward arrears clearance, debt restructuring, and re-engagement with the international community,” he said.
The IMF said Zimbabwe successfully met all quantitative targets under the programme.
These included maintaining the primary budget balance, strengthening net international reserves, limiting Reserve Bank of Zimbabwe (RBZ) lending to the non-financial public sector, restricting new non-concessional external borrowing and keeping growth of the ZiG monetary base within agreed limits.
The Fund said most indicative targets were also achieved.
However, spending on protected social programmes fell short of expectations, underscoring the need for stronger budget execution to ensure vulnerable households receive timely support.
Zimbabwe also met its end-March structural benchmark aimed at improving the quality of the taxpayer register through better monitoring of VAT and PAYE compliance.
“The authorities are also making progress toward the end-June and end-September 2026 structural benchmarks,” Maliszewski said.
Despite a difficult global environment, the IMF said Zimbabwe’s economy had remained resilient. It noted that conflict in the Middle East had increased fuel, fertiliser and transport costs, yet domestic economic activity continued to perform strongly.
Economic growth accelerated to 8.3 percent in 2025, supported by a rebound in agriculture following improved weather conditions, strong mining production and favourable international gold prices.
The IMF expects Zimbabwe’s economy to expand by about five percent in 2026 before moderating to 4.2 percent in 2027 under its baseline forecast.
However, it warned that weather-related risks remain significant.
“If the projected El Niรฑo materialises, growth could moderate further to the 2-3 percent range, with additional downside risks from a stronger-than-expected El Niรฑo and escalation of the Middle East war,” the Fund said.
The IMF also commended the government’s fiscal management, saying stronger revenue collection and prudent expenditure controls had produced better-than-expected first-quarter results.
“Staff welcomes the authorities’ commitment to maintain spending within the approved 2026 national budget, while saving additional revenues to build buffers for potential food-security needs in 2027,” Maliszewski said.
He added that strengthening public financial management, improving commitment controls and clearing domestic arrears would be critical to maintaining fiscal credibility.
On monetary policy, the IMF urged the RBZ to maintain a tight policy stance until inflation expectations are firmly anchored and confidence in the ZiG strengthens.
It also welcomed the introduction of ZiG-denominated term deposits and plans to further liberalise the foreign exchange market.