KEY POINTS
- The IMF estimates that Zimbabwe’s GDP will expand by 6 percent in 2025.
- Outlook clouded by weak reform confidence and heavy borrowing.
- New ZIG currency has yet to stabilize FX market.
The International Monetary Fund said Thursday that Zimbabwe’s economy will grow 6 percent this year, a sharp rebound from last year’s drought-hit 1.7 percent expansion.
The Washington-based lender credited higher agricultural production, record gold prices and resilient remittance flows for the recovery, though it cautioned that policy credibility and financing pressures remain a drag. The government’s own forecast is slightly more optimistic at 6.6 percent.
IMF cites growth drivers in fragile recovery
The southern African country has been negotiating with creditors to clear arrears and restructure debt while contending with a foreign exchange crunch. The IMF said macroeconomic conditions had improved modestly, but sustainability is uncertain.
Growth is likely to slow to about 3.5 percent in the medium term, the Fund said, pointing to low confidence in the durability of reforms and the state’s heavy reliance on domestic borrowing.
Domestic arrears and borrowing raise risks
The government has leaned on Treasury bills to cover rising arrears since last year, a move that could squeeze private sector credit, according to the IMF. The Fund called for tighter fiscal discipline to contain the financing gap.
ZIG currency hasn’t closed the FX gap yet
The IMF also pointed out that Zimbabwe’s exchange rate problems are still there, even if the gold-backed Zimbabwe Gold (ZIG) currency was introduced in April 2024.
There is still a big difference between official and parallel market rates, which shows that people don’t trust monetary changes very much.
