Harare (New Ziana) –Zimbabwe’s economy continues to show resilience in the face of significant internal and external shocks due to the sound monetary and fiscal policies which the government is implementing, the International Monetary Fund (IMF) said on Tuesday.
The government has in the past weeks put in place new measures to cure ills afflicting the economy, including introducing gold coins, to reign in the volatile parallel market.
In a statement at the conclusion of a staff visit from 12 to 19 September, IMF team leader Dhaneshwar Ghura said in line with the resilient performance, Zimbabwe’s economy was expected to grow, albeit at a slower rate than that projected by the government.
The government expects the economy to grow by 4.6 percent, down from 5.5 percent that it had initially projected.
“Zimbabwe’s economy has shown resilience in the face of significant shocks. Russia’s war in Ukraine, the poor rainfall, and price pressures are adversely affecting economic and social conditions in Zimbabwe, already battered by the Covid-19 pandemic,” said Ghura.
“After rising to about 7 percent in 2021, real GDP growth is expected to decline to about 3.5 percent in 2022 reflecting a slowdown in agricultural and energy outputs owing to erratic rains and rising macroeconomic instability, amidst a recovery in mining and tourism. Uncertainty remains high, however, and the outlook will depend on the evolution of external shocks, the policy stance, and implementation of inclusive growth-friendly policies.”
Ghura added; “The IMF mission notes the authorities’ efforts to stabilize the local foreign exchange market and lower inflation. In this regard, the recent tightening of monetary policy and the contained budget deficits are policies in the right direction and have contributed to the narrowing of the parallel market exchange rate gap.”
He said further efforts were needed to durably anchor macroeconomic stability and accelerate structural reforms.
“The near-term macroeconomic imperative is to curb inflationary pressures by further tightening monetary policy, as needed, and allowing greater exchange rate flexibility,” he said.
“Durable macroeconomic stability and structural reforms would bode well for supporting Zimbabwe’s development objectives as embodied in the country’s National Development Strategy 1 (2021-2025).”
On its part, the government believes that the economy was now recording some positives, including increased foreign currency receipts, a near balanced budget as well as increased capacity utilisation in the manufacturing sector.
Presenting the mid-term budget review and supplementary budget in July, Finance Minister Mthuli Ncube said Zimbabwe’s exports increased by 33 percent to US$3.5 billion while imports grew by 15 percent to US$3.7 billion in the first half of this year.
For the full year, exports are projected to reach US$7.3 billion, on the back of stronger commodity prices and increased agricultural and manufactured exports.