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IMF Wraps Up Talks in Harare, Urges Zimbabwe to Address Economic Challenges

Harare – An International Monetary Fund (IMF) team led by Mr. Wojciech Maliszewski wrapped up discussions in Harare on Sunday after a two-week visit aimed at exploring Zimbabwe’s request for a Staff Monitored Program (SMP) and commencing the 2024 Article IV Consultation.

In a statement at the conclusion of the mission, Mr. Maliszewski commented on Zimbabwe’s economic landscape, noting its resilience amidst currency instability and soaring inflation. He highlighted the estimated 5.3 percent GDP growth in 2023, largely attributed to expansions in agriculture and mining, alongside robust foreign currency inflows and remittances that supported domestic trade and services. However, he cautioned that growth is expected to moderate to around 3¼ percent in 2024, citing the impact of a drought on agricultural output and declining commodity prices.

Maliszewski pointed out the intensification of instability in the local currency (ZWL), with a staggering 95 percent depreciation in the official exchange rate since December 2023. He highlighted disparities between official and parallel market rates, coupled with persistently high ZWL inflation, as factors weighing on sentiment. The IMF official also raised concerns over exchange rate restrictions, including mandated use of the official ZWL rate with a 10 percent margin for retailers, which he stated were burdensome for the formal sector and promoted informality.

He disclosed that Zimbabwean authorities had requested a new Staff Monitored Program (SMP) to bolster stabilization efforts and reengage with the international community. Discussions during the mission centered on policies to restore macroeconomic stability and enhance growth prospects, with a focus on addressing fiscal pressures, liberalizing the foreign exchange market, and advancing governance reforms.

While commending authorities’ efforts to address fiscal challenges, Maliszewski highlighted the need to close the budgetary gap resulting from the transfer of Reserve Bank of Zimbabwe’s (RBZ) external liabilities to the Treasury. He underscored the importance of avoiding inflationary financing and urged the implementation of a comprehensive plan alongside a suitable legal framework.

The IMF mission stressed the urgency of FX market reforms to promote transparency and market-driven pricing, advocating for the removal of existing restrictions and distortions. Additionally, Maliszewski emphasized the importance of structural reforms to improve the business climate, governance, and transparency, aligning with Zimbabwe’s National Development Strategy 1 (2021-2025).

While the IMF continues to provide policy advice and technical assistance, Maliszewski reiterated that financial support hinges on comprehensive debt restructuring and a reform plan aligned with macroeconomic stability and governance enhancements.

During the visit, IMF staff met with key stakeholders, including Finance and Economic Development Minister Prof. Mthuli Ncube, Deputy Minister Hon. David Mnangagwa, RBZ Governor Dr. John Mangudya, as well as representatives from the private sector, civil society, and development partners.

The IMF expressed gratitude to Zimbabwean authorities and stakeholders for their constructive engagement during the consultation mission.

IMF Wraps Up Talks in Harare
IMF Wraps Up Talks in Harare
IMF Wraps Up Talks in Harare