The International Monetary Fund (IMF) has acknowledged that Zimbabwe has made “significant progress” in its economic reforms but warned that the country still needs to implement decisive measures before qualifying for a staff-monitored program. The announcement was made this Wednesday (18th) in a statement cited by Bloomberg.
“Zimbabwe is experiencing a certain degree of macroeconomic stability, despite ongoing political challenges,” the IMF noted. According to the institution, the adoption of more disciplined economic policies has contributed to economic stabilization after years marked by successive episodes of hyperinflation.
Among the key measures, the IMF highlighted the suspension of quasi-fiscal operations by Zimbabwe’s central bank — now transferred to the Treasury — and the implementation of a tighter monetary policy, even amid strong budgetary pressures. These actions helped curb inflation and stabilize the country’s new national currency, the Zimbabwe Gold (ZiG), introduced in 2024 and backed by gold.
Last year, Zimbabwe’s economic growth was affected by a severe drought, which reduced agricultural output by 15%. Electricity production also declined, and falling platinum and lithium prices hit the mining sector. Still, the IMF estimates that “growth is expected to recover and reach 6% this year.”
The recovery is being driven by improved weather conditions and historically high gold prices, which boosted both agriculture and mining in the first half of 2025. These factors strengthened the current account balance and supported the revival of economic activity in the country. Public revenue rose to 18% of Gross Domestic Product (GDP), driven by measures such as tax increases, reduction of tax exemptions, taxation of COVID-19-related subsidies, and efforts to combat smuggling. However, the revenue collected was insufficient to cover the State’s rising expenditures.
These expenses include public sector wage hikes, costs associated with hosting the Southern African Development Community (SADC) summit, debt service related to central bank operations, and investments for the Mutapa Investment Fund. The budget deficit was financed through the issuance of Treasury bills and loans from the central bank, which increased domestic liquidity and led to the depreciation of the ZiG in September 2024.
Following the currency’s depreciation, inflation surged in October last year but fell in the subsequent months. The stabilization of both official and parallel exchange rates led to a significant drop in inflation, which averaged 0.5% per month between February and May this year.
Source: DE
