The International Monetary Fund (IMF) has completed the first review of Zimbabwe’s 10-month Staff-Monitored Programme (SMP), recalibrating key fiscal anchors to lock in revenue overperformance and contain emerging fiscal risks.

Under the modified framework, the Bretton Woods institution introduced a new quarterly floor on central government deposits to accumulate a minimum US$275 million cash buffer against potential 2027 food-security shocks, alongside a US$300 million annual cap on gold-delivery incentives.

The completion of the review follows robust economic momentum in early 2026, building on a revised 8.3% real GDP expansion in 2025 driven by buoyant mining activity, record gold prices, and a statistical rebasing following the national economic census.

Despite external headwinds from Middle East trade disruptions and higher fuel prices, the IMF maintains Zimbabwe’s 2026 growth forecast at 5.0%, with annual inflation expected to close the year at 8.0% under continued monetary discipline.

To preserve macroeconomic stability, the IMF and Zimbabwean authorities agreed to strengthen program safeguards after fiscal spending overran in specific areas during the first quarter.

While Zimbabwe generated a primary cash surplus of US$371 million in the first quarter, surpassing targets due to strong value-added tax and customs collections, unbudgeted gold-delivery incentives for artisanal miners surged to US$118 million against an annual budget of US$16 million.

Furthermore, accelerated debt amortisation payments reached US$398 million, diverting funds from planned reserve accumulation.

“Sustained policy discipline, stronger fiscal risk management, protection of social spending, continued monetary and exchange rate reforms, and governance improvements will be important to entrench macroeconomic stability and advance Zimbabwe’s re-engagement efforts,” the IMF staff report stated.

To address the slippages, the central government’s projected 2026 revenue target was adjusted upward from US$9 billion to US$10.3 billion, with all excess collections earmarked for deposit buffers rather than expansionary spending.

The Ministry of Finance and Economic Development committed to assessing the long-term viability of the ad valorem gold-incentive scheme ahead of the 2027 budget.

Additionally, authorities agreed to consult IMF staff in advance on future liability-management operations and restrict domestic arrears clearance strictly to audited budget allocations.

On the monetary front, the Reserve Bank of Zimbabwe maintained tight liquidity management, keeping ZiG monetary base expansion below program ceilings.

The Bretton Woods institution welcomed the operationalisation of the new ZiG-denominated Term Deposit Facility as a step toward market-based monetary tools, while urging the central bank to phase out non-negotiable certificates of deposit and gradually eliminate its policy rate floor to support domestic interbank market development.

Program performance remained solid overall, with all five quantitative targets through end-March met.

However, the indicative target on protected social spending was breached by $84 million due to budget execution delays in critical programs, including the Basic Education Assistance Module.

Authorities are now taking corrective measures to expedite transfers to vulnerable households ahead of the second program review.

Zimbabwe’s total public debt stood at US$22.7 billion (38% of GDP) at end-2025, with external debt remaining in distress.

IMF staff emphasised that maintaining strong execution under the SMP is crucial for establishing the track record required to advance arrears clearance negotiations with official bilateral creditors and multilateral institutions.