IMF Completes First Review of Zimbabwe Staff-Monitored Programme

• The IMF has completed its first review of Zimbabwe's Staff-Monitored Programme (SMP), projecting continued single-digit inflation.
• Zimbabwe's economy demonstrated remarkable growth in 2025, achieving a rate of 8.3% despite a challenging global environment.
• The Fund projects economic growth to continue at 5% in 2026, moderating to 4.2% over the medium term.
• The IMF has cautioned that Zimbabwe's outlook remains vulnerable due to potential risks such as a significant El Niño weather event and renewed conflict in the Middle East.

The outlook remains favourable, but risks are tilted to the downside

Zimbabwe's economic resilience has been put to the test in recent months, but the country has managed to maintain its macroeconomic stability. According to the IMF, Zimbabwe's economy demonstrated remarkable growth in 2025, achieving a rate of 8.3% despite a challenging global environment. This performance was underpinned by improved agricultural output, strong mining activity, and favourable gold prices. The Fund projects that economic growth will continue at 5% in 2026, moderating to 4.2% over the medium term. However, the IMF has cautioned that Zimbabwe's outlook remains vulnerable due to potential risks such as a significant El Niño weather event and renewed conflict in the Middle East.

The IMF's review of Zimbabwe's Staff-Monitored Programme (SMP) has highlighted the importance of maintaining current macroeconomic policies to ensure single-digit inflation. The Fund praised the government's fiscal performance, noting that the primary budget balance exceeded expectations on the back of stronger-than-expected revenue collections. However, the target for protected social and priority spending was missed, and the IMF urged authorities to maintain spending within approved 2026 National Budget ceilings while saving any additional revenues to build buffers against possible food security challenges in 2027. The Fund also commended the Reserve Bank of Zimbabwe for maintaining a tight monetary policy stance, which has helped contain inflation and ease pressure on the foreign exchange market.

The IMF's assessment of Zimbabwe's SMP is a significant milestone in the country's efforts to consolidate recent macroeconomic stability. However, the Fund's warning that economic risks remain highlights the need for continued vigilance and reform implementation. Lawyers and compliance officers should be aware of the potential impact of a significant El Niño weather event on Zimbabwe's economy, which could lead to increased food security challenges in 2027. The IMF's recommendations for enhanced fiscal risk management, improved public financial management, and measures to prevent the accumulation of new domestic arrears are also crucial for maintaining economic stability.

Lawyers and compliance officers should watch for the potential impact of a significant El Niño weather event on Zimbabwe's economy, which could lead to increased food security challenges in 2027.

Source: Original reporting via New Zimbabwe