Numbers & Statistics

IMF Managing Director Approves a Staff-Monitored Program for Zimbabwe

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Via IMF (Den Internationale Valutafond)

IMF Managing Director Approves a Staff-Monitored Program for Zimbabwe







May 31, 2019















The Managing Director of the IMF approved on May 15, 2019, a
Staff-Monitored Program (SMP) for Zimbabwe, covering the period of May 15,
2019 to March 15, 2020.

[1]

Zimbabwe faces deep macroeconomic imbalances. After moving to full
dollarization in late 2008 to break a period of hyperinflation, fiscal
deficits increased substantially during 2016–18, financed by the issuance
of quasi-currency instruments nominally at par to the US dollar and the
continued accumulation of external arrears. The fragile equilibrium was
maintained through exchange controls and other restrictions on access to
foreign exchange, providing a deep distortion for economic activity.

The new government that assumed office following the July 2018 elections is
committed to addressing the macroeconomic imbalances, removing structural
distortions to facilitate a resumption in growth, and to re-engaging with
the international community including by clearing its external arrears. The
authorities have elaborated a comprehensive structural reform program—the
Transitional Stabilization Program—to address structural rigidities in the
economy while also taking key steps to address the macroeconomic imbalances
by halting the issuance of quasi-currency instruments to finance the
deficit (since September 2018) and introducing a new domestic currency in
February 2019.

The SMP is designed to support the authorities’ reform agenda. The SMP will
be monitored on a quarterly basis, and is intended to assist the
authorities in building a track record of implementation of a coherent set
of economic and social policies that can facilitate a return to
macroeconomic stability and assist in reengagement with the international
community.

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Economic policies under the SMP emphasize the restoration of macroeconomic
and financial sector stability through: implementing a large fiscal
adjustment, the elimination of central bank financing of the fiscal
deficit, and adoption of reforms to allow the effective functioning of
market-based foreign exchange and debt markets. Structural reforms include
steps to reform and privatize state owned enterprises, enhance governance
including in procurement and revenue administration, and to improve the
business environment. The SMP also includes important safeguards to protect
the country’s most vulnerable people.

Risks to the SMP are high, including due to the materialization of two
external shocks—the El Niño related drought impacting both agricultural
production and electricity supply as well as the extensive damage caused by
Cyclone Idai in March. The impact of these two shocks complicate an already
difficult near-term economic outlook as the economy adjusts to the new
policy regime. To mitigate the potential risks from capacity constraints,
the IMF will support the authorities’ efforts in all policy areas covered
by the SMP through tailored technical assistance.




Zimbabwe: Selected Economic Indicators

Population (2017, millions):

16.5

GDP per capita (2017, constant 2011 PPP)

$2,212

Quota (current, SDR millions, % of total)

706.8 (0.15%)

Main products and exports:

Tobacco, gold, platinum, diamonds

Key export markets:

China, EU, South Africa, Zambia

2016

2017

2018

2019

Act.

Act.

Proj.

Proj.

Output and Prices

Real GDP growth (%)

0.7

4.7

3.4

-2.1

Nominal GDP (US$ millions)

20,549

22,041

23,113

22,679

Inflation (%, average)

-1.6

0.9

10.6

80.8

Inflation (%, eop)

-0.9

3.4

42.1

49.6

Central government finances

Revenue and grants (% GDP)

16.8

14.1

12.8

13.3

Expenditure and net lending (% GDP)

23.9

24.0

18.5

17.3

Overall balance (% GDP)

-6.7

-9.7

-7.1

-4.0

Public debt

Consolidated public sector debt (% GDP)

49.1

54.9

66.4

55.9

Public and publicy-guaranteed external debt (% GDP)

38.9

40.1

41.6

45.4

Money and credit

Money supply (% change)

18.8

44.2

24.1

32.3

Credit to private sector (% change)

-3.9

5.9

4.0

5.0

Exchange rate (RTGS per USD, eop)

1.1

1.5

3.5

Balance of payments

Current account (% GDP)

-3.5

-1.3

-4.5

-2.2

FDI (% GDP)

1.7

1.4

1.6

0.9

Reserves (months of imports)

0.6

0.5

0.1

0.2

Sources: Zimbabwean authorities; IMF staff estimates
and projections.




[1]

An SMP is an informal agreement between country authorities and
Fund staff to monitor the implementation of the authorities’
economic program. SMPs do not entail financial assistance or
endorsement by the IMF Executive Board.


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Lucie Mboto Fouda

Phone: +1 202 623-7100Email: MEDIA@IMF.org






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