The International Monetary Fund (IMF) has issued a cautiously optimistic review of Zimbabwe’s economy, noting a degree of macroeconomic stability while warning of ongoing fiscal and monetary policy challenges that continue to weigh on long-term recovery.
Zimbabwe, long plagued by hyperinflation, policy inconsistency, and a volatile exchange rate regime, has begun to show signs of stabilisation in 2025, according to an IMF mission led by Wojciech Maliszewski. In particular, the IMF pointed to tight monetary policies and high global gold prices as key contributors to a short-term economic rebound.
“Growth this year is recovering following a sharp slowdown in 2024. Better climate conditions and historically high gold prices have boosted agricultural and mining activity, strengthening the current account,” Maliszewski stated.
The IMF now projects Zimbabwe’s GDP to grow by 6% in 2025, aided by strong performances in gold mining and agriculture. But this optimism is tempered by warnings over fiscal pressures and structural weaknesses, particularly in relation to the country’s fledgling ZiG (Zimbabwe Gold) currency.
ZiG Currency and Monetary Policy
Zimbabwe’s move toward a mono-currency regime by 2030, anchored by the ZiG, has gained partial IMF endorsement, with the institution applauding the tighter monetary policies that have helped reduce inflation and restore some currency stability. However, it warned that “fiscal dominance”—where government borrowing undermines monetary discipline—remains a serious risk.
The Reserve Bank of Zimbabwe (RBZ) has kept the monetary policy rate at 35%, signalling its intent to restrict money supply in an effort to rein in inflation. Still, critics argue that this has exacerbated liquidity shortages and weakened business confidence.
Currency Crisis and Dollarisation Concerns
Despite efforts to strengthen the ZiG, the rapid pace of dollarisation in the Zimbabwean economy has raised concerns. The IMF has advised the government to enhance domestic demand for ZiG by improving price-setting transparency in the foreign currency market and gradually replacing export surrender requirements with open market conversions.
Currently, exporters are forced to exchange a portion of their foreign earnings for local currency at below-market rates—a policy that discourages export growth and undermines trust in the local monetary system.
“There must be confidence in the local currency and it must be seen to hold value, otherwise the economy will continue to shun it,” said a Harare-based bank manager.
Fiscal Pressures and Public Spending
The IMF flagged Zimbabwe’s worsening fiscal deficit, driven by:
- Rising public sector wages
- Increased capital expenditure
- Higher debt servicing costs
- Financing for the Mutapa Investment Fund
To bridge the fiscal gap, the government relied heavily on Treasury Bills and overdraft borrowing from the RBZ, which flooded the economy with domestic liquidity and triggered a sharp devaluation of the ZiG in September 2024. The result was a buildup of expenditure arrears that persisted into 2025.
Path to a Single Currency System
The IMF has reiterated that Zimbabwe’s transition to a mono-currency system must be handled with care, transparency, and clarity. It recommends allowing bank deposits to remain multi-denominational, with the mono-currency regime limited strictly to domestic transactions.
“The government must walk the talk and show that they have contained expenditure and are dealing with corruption which erodes confidence,” noted a financial expert.
Regional Business Ties and Investor Confidence
South African corporations including Impala Platinum, Sibanye-Stillwater, Pick n Pay, and Old Mutual maintain a presence in Zimbabwe. Many have expressed concern over policy unpredictability, which has led to pricing distortions, licence delays, and currency losses.
The IMF stressed that for Zimbabwe to regain full investor confidence, it must:
- Reform the exchange rate mechanism
- Curb fiscal excesses
- Combat corruption
- Strengthen financial intermediation
Conclusion
Zimbabwe’s economic recovery is fragile but real, driven by tight monetary controls and favourable global commodity prices. The IMF’s endorsement is conditional and wrapped in warnings about policy clarity, currency confidence, and fiscal discipline. Whether Zimbabwe can fully stabilise its economy and achieve a unified local currency by 2030 hinges on the government’s ability to rebuild trust, rein in spending, and pursue transparent reforms.
