IMF withholds Zimbabwe reform programme

The International Monetary Fund (IMF) has signalled that Zimbabwe's much-anticipated Staff Monitored Programme (SMP) - a critical step in the country's economic reform and debt resolution strategy - will only begin once authorities take "decisive steps" to address key policy shortcomings, delivering a blow to the country's ongoing re-engagement efforts.

The SMP is seen as a gateway to unlocking broader support from international creditors, as Zimbabwe looks to normalise relations with bilateral and multilateral lenders under the Structured Dialogue Platform. However, the IMF, in its latest Article IV consultation report, made clear that substantial groundwork remains before the reform process can begin.

"In the context of the requested SMP, IMF staff stands ready to resume discussions in due course once decisive steps have been taken by authorities to address the key policy issues highlighted by the mission," said Wojciech Maliszewski, IMF Mission Chief to Zimbabwe.

Among the issues raised, the IMF noted Zimbabwe's plan to transition to a mono-currency system by 2030, centred around the newly introduced Zimbabwe Gold (ZiG) currency. Maliszewski stressed that the transition must be supported by strengthening the monetary and foreign exchange framework, aligned with IMF recommendations.

"This should be complemented by measures to enhance demand for ZiG in the domestic economy-most notably, increasing the share of Treasury operations in ZiG," he said.

He added that authorities must also clarify the operational implications of the mono-currency transition to ease uncertainty in the financial sector, including assurances that dual-currency bank deposits will be maintained and that the mono-currency would apply only to domestic transactions.
Policy Priorities and Structural Reforms

The IMF outlined several key policy priorities that Zimbabwe must address before the SMP can be activated:

Bridging the fiscal financing gap for 2025 in a sustainable and non-inflationary manner.

Enhancing the Willing Buyer Willing Seller (WBWS) foreign exchange market by making pricing more transparent and gradually replacing surrender requirements with market-based conversion of export proceeds.

Modernising monetary policy tools, including establishing an effective deposit facility at the Reserve Bank of Zimbabwe (RBZ) and shifting toward indirect market instruments, while phasing out direct controls.

In the long term, pursuing a comprehensive macroeconomic and structural reform package that would allow for a gradual relaxation of capital flow restrictions and elimination of Article VIII exchange limitations.

The IMF also urged improved governance of Zimbabwe's sovereign wealth vehicle, the Mutapa Investment Fund, which has drawn criticism for opacity and alleged political interference.

"To mitigate fiscal risks, the mission recommended strengthening the governance framework for the Mutapa Investment Fund in line with international best practices - including enhanced reporting, audits, disclosure, and oversight," Maliszewski said.

The IMF reaffirmed that re-engagement with the international community remains essential for resolving Zimbabwe's longstanding external debt arrears and regaining access to concessional financing.

"In this context, the authorities' re-engagement efforts, through the Structured Dialogue Platform, are key for attaining debt sustainability and gaining access to concessional external financing," the report noted.

Zimbabwe's last IMF-monitored programme collapsed in 2020 after policy slippages, and the latest developments signal that renewed support will hinge on genuine reform. With public finances strained, inflation pressures lingering, and confidence in the new currency still fragile, the country's economic path now rests on its willingness to implement meaningful and transparent policy changes.