ZiG Stability Not Enough for SMP Approval, Says IMF

Oscar J. Jeke- Zim Now Reporter

The International Monetary Fund has acknowledged Zimbabwe’s recent economic stabilization efforts—particularly the relative success of its new currency, the ZiG—but says this progress alone is not sufficient to secure approval for a Staff-Monitored Program.

Following a mission to Harare from June 4 to 18, the IMF concluded that while Zimbabwe has made “significant progress” in achieving macroeconomic stability, more decisive reforms are required before an SMP—seen as a key step toward re-engagement with international creditors—can be approved.

“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,” the IMF said in its end-of-mission statement.

Wojciech Maliszewski, head of the IMF delegation, acknowledged improvements in Zimbabwe’s macroeconomic outlook but stressed that more work is needed. “Looking at the current macroeconomic situation compared to when I started my assignment, it’s massive progress. But a lot of work still needs to be done,” he said.

Zimbabwe is seeking an SMP not for immediate financial aid—as it does not come with funding—but as a confidence-building measure essential for unlocking talks on debt relief and arrears clearance with international lenders.

The IMF noted that the ZiG, introduced in April 2024, has shown signs of stability, with both official and parallel market exchange rates holding relatively firm. Month-on-month inflation averaged just 0.5% between February and May 2025, aided by improved discipline in government spending and a recovery in agriculture and mining. Economic growth is projected to rebound to 6% in 2025.

However, the IMF pointed out that structural and fiscal weaknesses remain. A key concern is the persistent 20% gap between the official and parallel exchange rates. The Fund welcomed the repeal of Statutory Instrument 81A of 2024—which had forced businesses to price goods using the official rate—saying the move would promote more efficient pricing and reduce market distortions.

On fiscal management, the IMF warned that Zimbabwe must close its 2025 budget financing gap without reverting to money printing or accumulating arrears. It emphasized that the 2026 budget will be a litmus test of whether the country can demonstrate sustained fiscal discipline and strengthen its financial oversight systems.

Currency reform remains central to the IMF’s recommendations. The Fund urged the government to reform the foreign exchange market, reduce reliance on the 70:30 export surrender requirement, and allow banks to directly convert export proceeds. 

The Reserve Bank, it said, should focus on managing exchange rate volatility rather than setting the rate. The IMF also suggested eventually introducing more flexible monetary tools—such as a deposit facility—and gradually lifting capital controls.

The IMF also flagged transparency issues at the Mutapa Investment Fund, Zimbabwe’s sovereign wealth fund, calling for tighter governance and alignment with international standards to mitigate fiscal risks stemming from state-owned enterprises.

Regarding Zimbabwe’s ambition to transition to a single currency by 2030, the IMF said more action is needed to boost confidence in the ZiG. It encouraged the government to increase its use of the ZiG in revenue collection and public expenditure. 

To calm market fears, the Fund also advised the government to clarify that, even as local transactions shift to a mono-currency regime, deposits in both ZiG and U.S. dollars will remain accessible.

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