IMF reviews GDP growth projections for Zimbabwe to 4.8%

The visiting International Monetary Fund (IMF) has reviewed upwards growth projection for Zimbabwe in 2023 to 4.8%.

Previously Zimbabwe’s Gross Domestic Product (GDP) was estimated to grow by 3.2%.

The team which was led by Wojciech Maliszewski, ended its mission to Zimbabwe and released its findings. The IMF team visited Harare between October 18–25, 2023 to discuss recent economic developments and the economic outlook.

The team estimated GDP to grow by 4.8% in 2023 followed by a slow down to 3.5% in 2024.

“Zimbabwe’s economy has continued its post-COVID recovery, but enhancing its longer-term growth potential would require strong reform efforts. Real GDP is projected to grow by around 4.8 percent in 2023, supported by strong activity in the mining sector and—reflecting the beneficial impact of structural reforms—in agriculture and energy sectors.

Growth is expected to slow to 3.5 percent in 2024 due to weaker global demand for minerals and a weather- related slowdown in agriculture. As external conditions worsen, the economic outlook will even more crucially depend on progress toward macroeconomic stabilization and transformational structural reforms”, read the statement.

Exchange rate disparities continue to haunt the country. The team commended government for removing foreign exchange surrender requirements.

” Local-currency (ZWL) inflation and exchange rate pressures have abated in recent months, following significant price increases and exchange rate depreciation in the second quarter of 2023. The IMF mission notes the authorities’ recent efforts into stabilizing the foreign exchange market and lowering inflation through the tightening of ZWL liquidity conditions.

The mission welcomes the removal of surrender requirements on domestic sales in FX. The announced plan for the transfer of RBZ FX liabilities to the Treasury is also welcome. Nevertheless, the parallel FX market premium is large at above 30 percent, and ZWL inflation remains high. The fiscal deficit, excluding QFOs, is projected at 2.3 percent of GDP in 2023″, read the statement

The IMF team enciuraged authorities to institute policy and structural reforms to improve the business climate.

“Structural reforms aimed at improving the business climate and reducing governance vulnerabilities are key for promoting sustained and inclusive growth and would bode well for supporting Zimbabwe’s development objectives embodied in the country’s National Development Strategy 1 (2021-2025).”

The issue of debt overhang continue to be an albatross on the neck of government operations. The IMF continue to advocate for resolution of the debt overhang so that the country can start accessing financial support from the institution.

The staff visit be followed by a Staff Monitored Program (SMP) and the next Article IV consultation.

During its stay the team met with relevant stakeholders such as the Minister of Finance, Economic Development and Investment Promotion Hon. Professor Mthuli Ncube, his Permanent Secretary Mr. George Guvamatanga, the Reserve Bank of Zimbabwe Governor Dr. John Mangudya, the Deputy Chief Secretary to the President and Cabinet Mr. Willard Manungo, other senior government and RBZ officials, representatives of the private sector, civil society, and Zimbabwe’s development partners.

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