Zimbabwe Seeks IMF Staff Level Agreement to Boost Economic Reforms

Strategic Insights -

Finance Minister Professor Mthuli Ncube has revealed that the Treasury aims to secure a Staff Level Agreement (SLA) with the International Monetary Fund (IMF) on a Staff Monitored Programme (SMP) by the end of June this year. This development is expected to accelerate foreign investment inflows and propel the country's economic reform trajectory. Zimbabwe has engaged in extensive technical-level discussions with IMF staff, particularly in the areas of exchange rate reforms, fiscal consolidation, and avoidance of new arrears. The country has made significant progress in aligning its fiscal and foreign exchange market reforms, with the IMF's Mission to Zimbabwe in January-February 2025 expected to finalize the agreement.

Key Takeaways:

  • Professor Mthuli Ncube has informed the African Development Bank Annual Meetings that Zimbabwe is on track to secure a Staff Level Agreement (SLA) with the International Monetary Fund (IMF) on a Staff Monitored Programme (SMP) by the end of June this year.
  • The agreement will catalyze foreign investment inflows and bolster the country's economic reform trajectory.
  • Zimbabwe engaged in extensive technical-level discussions with IMF staff throughout 2024, focusing on exchange rate reforms, fiscal consolidation to prevent reliance on monetary financing, and avoidance of new arrears.
  • The country has made significant progress in aligning its fiscal and foreign exchange market reforms, with the IMF's Mission to Zimbabwe in January-February 2025 expected to finalize the agreement.
  • Zimbabwe has transferred legacy debt obligations from the Reserve Bank of Zimbabwe's quasi-fiscal operations (QFOs) to Treasury, with no new QFOs undertaken since.
  • The launch of the Zimbabwe Gold (ZWG) currency in April 2024 has introduced a market-based exchange rate system.
  • The Structured Dialogue Platform (SDP), launched in December 2022, aims to institutionalize engagement with creditors, development partners, and stakeholders through a long-term reform agenda.

Statistics:

  • Zimbabwe's total Public and Publicly Guaranteed (PPG) debt stock stood at US$21 billion as of end-December 2024, comprising external debt of US$12.2 billion and domestic debt of US$8.8 billion.
  • The country's multilateral debt includes US$676 million owed to the African Development Bank, US$1.6 billion to the World Bank, and US$425 million to the European Investment Bank.
  • The accumulation of public debt arrears has limited Zimbabwe's access to external financing needed to achieve the National Development Strategy 1 (NDS1) development objectives and the Vision 2030 Sustainable Development Goal.

Sources:

  • Professor Mthuli Ncube, Finance Minister of Zimbabwe, speaking at the African Development Bank Annual Meetings in Ivory Coast on Monday.
  • Presentation by Professor Mthuli Ncube at the African Development Bank Annual Meetings.