The International Monetary Fund (IMF) has cautioned that Zimbabwe's debt and outstanding external payments remain excessively high, leaving the country dependent on its own resources to sustain economic activities.
This situation arises from Zimbabwe's ongoing difficulty in securing international funding due to its mounting debt, which has reached approximately US$21 billion.
The IMF's assessment followed the completion of a Staff-Monitored Program (SMP) discussion mission to Zimbabwe. Requested by Zimbabwean authorities in 2023, the program was designed to facilitate dialogue on economic reforms and fiscal policies.
The IMF's assessment concluded that Zimbabwe's existing debt burden, coupled with its unresolved external arrears, renders the country ineligible for financial assistance at this time, Bulawayo 24 News reports.
“The IMF is currently precluded from providing financial support to Zimbabwe due to its unsustainable debt situation - based on the IMF's Debt Sustainability Analysis (DSA) - and official external arrears,” according to the IMF statement.
The IMF mission, headed by Wojciech Maliszewski, Deputy Unit Chief in the African Department, was conducted from 30th January to 13th February. During the discussions, Maliszewski noted that although Zimbabwe’s economy had begun to recover following an El Niño-induced drought, growth had decelerated from 5.3% to an estimated 2% in 2024. The drought had a severe impact on agriculture, causing a 15% drop in production.
Despite these difficulties, Maliszewski pointed out that robust remittance inflows continued to bolster key sectors like domestic trade, services, and construction. As a result, Zimbabwe's current account surplus improved to an estimated US$500 million (1.4% of GDP) in 2024.
Furthermore, the IMF mission observed that fiscal pressures worsened in 2024, primarily due to the transfer of the Reserve Bank of Zimbabwe's quasi-fiscal operations to the Treasury.
Although revenue collection remained robust, the government faced a budget deficit estimated at 1% of GDP, leading to the accumulation of domestic expenditure arrears and the implementation of emergency spending cuts.
“Key areas of discussion during the mission included fiscal consolidation, avoiding monetary financing and new arrears, and building foundations for a durable fiscal consolidation,” the IMF statement added.
Looking forward, the IMF has forecast that Zimbabwe's economic growth could rebound to 6% in 2025, supported by a recovery in agricultural production due to better climate conditions and favourable trade terms.
Although Zimbabwe remains ineligible for financial assistance, the IMF reiterated its commitment to offering policy guidance and technical support to the country.
“The SMP aims to support Zimbabwe's efforts to stabilise the economy and re-engage with the international community on arrears clearance and debt resolution. The program's main objective is to durably anchor macroeconomic stability, building on policy recommendations from the 2024 Article IV consultation,” the IMF concluded.