Zimbabwe’s IMF Test: Turning Point or Missed Opportunity?

By Tinotenda Bhunu

HARARE – ZIMBABWE’S staff-level agreement with the International Monetary Fund (IMF) on a new Staff-Monitored Program (SMP) marks a pivotal moment in the country’s economic reform journey. While it does not involve immediate financial disbursements, the program carries significant weight because it focuses on credibility, discipline, and consistency qualities often lacking in the country’s past economic management.

For ordinary Zimbabweans, this matters in practical terms: stable prices, wages that maintain their value, and the ability to plan for the future. The SMP provides an external anchor to consolidate recent gains and strengthen confidence among citizens, businesses, and investors.

Consolidating Hard-Won Stability

Over the past few years, Zimbabwe has made notable progress. Inflation has declined sharply, fiscal discipline has improved, and the exchange rate has shown greater stability than in previous cycles. For households, this translates into fewer sudden price shocks; for businesses, a reduction in constant repricing.

The IMF-supported program seeks to entrench these gains through prudent budget execution, improved cash and expenditure controls, and strengthened public financial management. In practical terms, this is about preventing the fiscal slippages that historically fuelled inflation and currency instability. The SMP is less about introducing new policies than ensuring that existing reforms are applied consistently and transparently.

Strengthening Confidence in the National Currency

Confidence in the Zimbabwean dollar remains a central concern. The SMP focuses on sustained monetary discipline, improved foreign exchange market functioning, and rebuilding reserve buffers.

Currencies gain credibility not from policy statements alone, but from predictable implementation. By limiting quasi-fiscal activities and reinforcing the monetary policy framework, authorities aim to create a stable environment that allows firms to plan, invest, and price with certainty. While dollarisation will not disappear overnight, reduced volatility is a meaningful gain, lowering transaction costs and restoring normalcy to everyday economic life.

Growth Momentum and Its Limits

Economic growth has strengthened, largely driven by agriculture and mining. High gold prices and recovering output in platinum and lithium have contributed positively, while improved agricultural outcomes support food security and rural incomes.

However, growth remains concentrated and exposed to external shocks such as global commodity price swings and climate events. Many urban households and young job-seekers have yet to see stable employment or rising incomes. Turning macroeconomic stability into diversified, job-creating growth, particularly in manufacturing, services, and small and medium enterprises, remains a critical challenge.

Stability creates the conditions for private-sector expansion, but real transformation requires structural reforms that raise productivity, encourage value addition, and reduce the cost of doing business.

Governance and Fiscal Risk Management

The SMP emphasises governance and transparency, especially in state-owned enterprises under the Mutapa Investment Fund. Weak oversight has historically posed fiscal risks, often resulting in unplanned interventions that affect public services, prices, and taxation.

The program calls for audited financial statements for public entities and strict limits on unapproved borrowing, measures that reduce uncertainty and improve investor confidence. These technical reforms have far-reaching implications for fiscal sustainability and business planning.

Social Protection and Reform Sustainability

Economic reforms are most durable when they are socially sustainable. The SMP supports operationalising the Zimbabwe Social Registry, ensuring social assistance reaches households that need it most.

Well-designed social protection cushions vulnerable households from short-term shocks, maintains social cohesion, and reduces pressure for policy reversals. In this way, social protection is both a social imperative and a macroeconomic stabiliser, protecting Zimbabweans while reforms take root.

Re-engagement and a Narrow Window

It is important to note that the SMP does not resolve external debt challenges or immediately unlock concessional financing. Instead, it is part of a broader strategy to build a credible reform track record under the Structured Dialogue Platform. Successful implementation strengthens Zimbabwe’s position in future arrears clearance and debt restructuring discussions, while failure could reinforce lingering skepticism.The IMF agreement reflects cautious confidence in Zimbabwe’s reform trajectory. Stability is more visible than in years, but it remains fragile. The SMP creates a narrow window where policy discipline, transparency, and confidence can reinforce each other.For most Zimbabweans, the ultimate measure of success is simple: an economy where effort is rewarded, prices are predictable, and the future feels secure. Whether this moment becomes a turning point or another missed opportunity will depend on consistent implementation, not announcements.

Tinotenda Bhunu is an economist by profession. LinkedIn: https://www.linkedin.com/in/tinotenda-bhunu-114645208?utm_source=share&utm_campaign=share_via&utm_content=profile&utm_medium=android_app