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Zimbabwe, IMF talks underway
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Zimbabwe has entered into preliminary discussions with the International Monetary Fund (IMF) for a new Staff-Monitored Programme (SMP), marking a significant step toward restoring the country's economic credibility, re-engaging with international creditors, and unlocking future foreign investment.
The SMP is a non-binding arrangement under which IMF staff supervise the implementation of a government's economic reform agenda. While it does not provide financial assistance, it helps a country build a track record of sound economic policies, which is critical in securing future support from global lenders.
IMF Resident Representative in Zimbabwe, Dr Carlos Caceres, confirmed the development and said the Fund is working closely with local authorities to finalise the structure and objectives of the programme. Among the key elements under discussion are fiscal adjustments to avoid reliance on central bank financing, addressing off-budget fiscal risks such as those linked to the Mutapa Investment Fund, strengthening the effectiveness of the monetary policy framework underpinning the Zimbabwe Gold (ZiG) currency, and improving governance and transparency in public financial management.
Dr Caceres said the primary goal of the SMP is to establish a credible reform track record that would pave the way for Zimbabwe's re-engagement with the international financial community. The SMP also forms part of Zimbabwe's broader arrears clearance and debt resolution strategy under the Structured Dialogue Platform - a process facilitated by the African Development Bank (AfDB) and other development partners.
The proposed duration of the SMP will range between six and 18 months, depending on the country's performance in implementing agreed policy measures. According to Dr Caceres, the IMF will assess the programme's success based on how effectively Zimbabwe meets reform benchmarks, maintains macroeconomic stability, and commits to restructuring its external debt.
He further emphasized that Zimbabwe would need to develop a comprehensive plan for clearing arrears and restructuring debt in order to eventually qualify for full financial support from the IMF. The Fund continues to provide technical assistance to Zimbabwe in areas such as revenue collection, expenditure control, debt management, and the production of reliable macroeconomic statistics.
The move has been welcomed by local economists, who see it as a positive signal to the international community. Economist Mr Persistence Gwanyanya described the initiative as a vote of confidence by the IMF in the government's reform efforts. He pointed to the recent introduction of a market-determined exchange rate as a key policy shift, while also noting the need to further improve fiscal discipline and revenue generation.
Another economist, Dr Prosper Chitambara, said the SMP will enhance accountability and support the implementation of key economic and institutional reforms. He added that successful reform implementation would increase economic efficiency and revenue generation, ultimately helping Zimbabwe to settle its debt obligations.
Zimbabwe's debt burden remains a critical issue. According to the Ministry of Finance's 2024 Public Debt Report, the country's external debt stood at US$12.4 billion as of September 2024. Of that total, US$6.3 billion is owed to bilateral creditors and US$3.2 billion to multilateral lenders. An additional US$2.9 billion represents liabilities from the Reserve Bank of Zimbabwe that were transferred to Treasury in 2023. Arrears and penalties make up the bulk of this debt, including US$4.8 billion in bilateral arrears and US$2.7 billion in multilateral arrears.
To address this challenge, President Emmerson Mnangagwa in 2022 enlisted former Mozambican President Joaquim Chissano and African Development Bank President Dr Akinwumi Adesina to lead negotiations with international creditors and support Zimbabwe's political and economic governance reforms.
Zimbabwe is not the first country to pursue an SMP. Others such as Greece, Sri Lanka, Pakistan, Zambia, and Mozambique have used similar arrangements to rebuild their economic credibility and lay the foundation for broader financial assistance.
If Zimbabwe successfully implements the programme, it will mark a pivotal moment in its efforts to stabilise the economy, clear its arrears, and re-integrate into the global financial system.
The SMP is a non-binding arrangement under which IMF staff supervise the implementation of a government's economic reform agenda. While it does not provide financial assistance, it helps a country build a track record of sound economic policies, which is critical in securing future support from global lenders.
IMF Resident Representative in Zimbabwe, Dr Carlos Caceres, confirmed the development and said the Fund is working closely with local authorities to finalise the structure and objectives of the programme. Among the key elements under discussion are fiscal adjustments to avoid reliance on central bank financing, addressing off-budget fiscal risks such as those linked to the Mutapa Investment Fund, strengthening the effectiveness of the monetary policy framework underpinning the Zimbabwe Gold (ZiG) currency, and improving governance and transparency in public financial management.
Dr Caceres said the primary goal of the SMP is to establish a credible reform track record that would pave the way for Zimbabwe's re-engagement with the international financial community. The SMP also forms part of Zimbabwe's broader arrears clearance and debt resolution strategy under the Structured Dialogue Platform - a process facilitated by the African Development Bank (AfDB) and other development partners.
The proposed duration of the SMP will range between six and 18 months, depending on the country's performance in implementing agreed policy measures. According to Dr Caceres, the IMF will assess the programme's success based on how effectively Zimbabwe meets reform benchmarks, maintains macroeconomic stability, and commits to restructuring its external debt.
He further emphasized that Zimbabwe would need to develop a comprehensive plan for clearing arrears and restructuring debt in order to eventually qualify for full financial support from the IMF. The Fund continues to provide technical assistance to Zimbabwe in areas such as revenue collection, expenditure control, debt management, and the production of reliable macroeconomic statistics.
Another economist, Dr Prosper Chitambara, said the SMP will enhance accountability and support the implementation of key economic and institutional reforms. He added that successful reform implementation would increase economic efficiency and revenue generation, ultimately helping Zimbabwe to settle its debt obligations.
Zimbabwe's debt burden remains a critical issue. According to the Ministry of Finance's 2024 Public Debt Report, the country's external debt stood at US$12.4 billion as of September 2024. Of that total, US$6.3 billion is owed to bilateral creditors and US$3.2 billion to multilateral lenders. An additional US$2.9 billion represents liabilities from the Reserve Bank of Zimbabwe that were transferred to Treasury in 2023. Arrears and penalties make up the bulk of this debt, including US$4.8 billion in bilateral arrears and US$2.7 billion in multilateral arrears.
To address this challenge, President Emmerson Mnangagwa in 2022 enlisted former Mozambican President Joaquim Chissano and African Development Bank President Dr Akinwumi Adesina to lead negotiations with international creditors and support Zimbabwe's political and economic governance reforms.
Zimbabwe is not the first country to pursue an SMP. Others such as Greece, Sri Lanka, Pakistan, Zambia, and Mozambique have used similar arrangements to rebuild their economic credibility and lay the foundation for broader financial assistance.
If Zimbabwe successfully implements the programme, it will mark a pivotal moment in its efforts to stabilise the economy, clear its arrears, and re-integrate into the global financial system.
Source - zimpapers
