The International Monetary Fund (IMF) has projected Zimbabwe’s economy will rebound to 6 percent growth this year, but warns that the recovery, powered by record-high gold prices, is shielding the nation from its unresolved and deep-seated structural problems, Mining Zimbabwe can report.
By Rudairo Mapuranga
In its concluding statement for the 2025 Article IV consultation, the IMF confirmed that the growth surge is being driven by “better climate conditions and record high gold prices,” which have boosted mining activity and strengthened the country’s current account .
However, this golden lifeline offers only a temporary reprieve. The IMF Executive Board highlighted that intense fiscal pressures, critically low foreign reserves, and persistent parallel market exchange rate gaps continue to pose severe threats to medium-term stability .
“The growth is welcome, but it is growing on a weak foundation,” a Harare-based economic analyst noted. “The IMF is essentially saying that without fundamental reforms, this gold boom will only provide a short-term shield, not long-term health.”
The report underscores the mining sector’s dual role as both Zimbabwe’s economic engine and a reflector of its vulnerabilities. While gold has surged, the IMF also noted that declining prices for other key metal exports previously weighed on growth, revealing an over-reliance on a narrow range of volatile commodities .
The fund’s directors emphasized that “a tighter fiscal stance is needed,” urging authorities to rein in spending and rationalize tax incentives to build on the recent stability achieved through tighter monetary policy. They also stressed that accelerating governance reforms is critical to building investor confidence .
For Zimbabwe’s miners, the IMF assessment translates to a period of both opportunity and risk. The high gold price creates a profitable environment, but the underlying macroeconomic weaknesses—including currency instability and policy uncertainty—remain a direct challenge to sustainable expansion and investment.
The challenge for the government will be to leverage this period of high mineral revenue to implement the very reforms that can secure the economy’s future once the gold price shield inevitably weakens.
The Delicate Balance of Stability and Risk
Zimbabwe is currently “experiencing a degree of macroeconomic stability,” a hard-won achievement after recent periods of significant volatility . This stability is attributed directly to tighter policies, including the halting of quasi-fiscal operations and monetary financing by the central bank, which have helped reduce inflation and exchange rate pressures .
The introduction of the ZiG currency in April 2024 was a cornerstone of this effort. However, its path has been rocky. The IMF reports that between the ZiG’s introduction and September 2024, the ZiG monetary base increased by a staggering 215 percent, leading to an overnight drop in the currency’s value . In response, the Reserve Bank of Zimbabwe (RBZ) halted monetary financing, increased statutory reserve requirements, and raised the policy rate. These actions have since narrowed the premium between the official Willing-Buyer-Willing-Seller (WBWS) rate and the parallel market, bringing monthly ZiG inflation down to 0.3 percent by June 2025 .
Despite this progress, the IMF points to a persistent and concerning gap between the official and parallel exchange rates, indicating that confidence in the local currency is still fragile . This gap, along with a highly dollarized monetary system and low reserve buffers, forms a triad of vulnerabilities that could quickly undermine the current stability .
The Fiscal Conundrum: Spending Pressures and Mounting Debts
While the mining sector boosts national revenues, the government’s fiscal position remains precarious. The IMF notes that fiscal financing pressures have intensified despite higher revenues, as net external financing turned negative and spending needs increased .
The revenue improvements, achieved through measures like a reduction in VAT tax reliefs, increased fees and levies, and steps to reduce smuggling, have been overshadowed by rising expenditures . Key spending pressures include:
1)Higher public sector wages
2)Increased capital outlays
3)Servicing debt taken over by the Treasury from the RBZ
4)Servicing liabilities related to the acquisition of assets for the Mutapa Investment Fund
This squeeze led to the accumulation of nearly US$600 million of domestic expenditure arrears in 2024 alone, with the deficit financed by T-bill issuance and direct borrowing from the central bank’s overdraft facility . The IMF’s Executive Board has stressed that a tighter fiscal stance is “needed to close the fiscal financing gap, prevent further accumulation of domestic arrears, and preclude a return to monetary financing” . They recommend rationalizing tax incentives and reducing spending, particularly on the public compensation bill, while protecting social spending and public investment .
The ZiG and the Dollar: A Clarion Call for Clarity
A significant part of the IMF’s advice centers on Zimbabwe’s plan to transition to a “mono-currency” system by 2030, phasing out the multi-currency system that has long dollarized the economy . The Fund is urging the government to provide greater clarity on the operational implications of this plan .
Key unanswered questions include whether the use of a mono-currency will be limited to domestic transactions and whether bank deposits can remain denominated in both US dollars and ZiG . The IMF argues that providing this clarity is essential to reduce uncertainty, which is currently weighing on financial intermediation and broader market confidence .
To support this transition, the IMF recommends enhancing the monetary and foreign exchange frameworks. This involves:
1) Reducing the RBZ’s FX market footprint by gradually redirecting surrender requirements into the market.
2) Improving monetary control through market-based instruments.
3)Encouraging ZiG demand, notably by increasing the share of the Treasury’s operations (revenues and expenditures) in the local currency .
The Broader Reform Agenda and the Path Forward
Beyond immediate fiscal and monetary fixes, the IMF highlights that closing structural gaps is vital for unlocking Zimbabwe’s economic potential. The Fund’s directors “concurred that closing important structural gaps could significantly boost Zimbabwe’s economic potential” .
A critical area is governance and the management of state-owned enterprises. The IMF specifically calls for strengthening the governance framework for the Mutapa Investment Fund, including enhancing its reporting, audit, disclosure, and oversight requirements in line with international best practices . This is essential to mitigate fiscal risks and ensure transparency.
Furthermore, the IMF welcomes recent progress on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) reforms, noting that an acceleration of these and other governance reforms is “critical for reducing vulnerabilities and sustaining medium-term growth” .
Ultimately, Zimbabwe’s ability to attract external financing and achieve debt sustainability hinges on its reengagement with international creditors. The Structured Dialogue Platform (SDP) provides a framework for this, focusing on economic, governance, and land reforms . The IMF notes that a stronger policy reform track record, potentially supported by a Staff-Monitored Program (SMP), could be pivotal in these efforts .
A Golden Opportunity for Fundamental Change
The IMF’s 2025 assessment presents a clear message to Zimbabwe’s policymakers and the mining industry: the current boom is a respite, not a solution. While high gold prices are driving a welcome recovery, they are also buying time to implement the difficult reforms that have been delayed for years.
For the mining sector, the report underscores that its long-term success is inextricably linked to the country’s overall macroeconomic health. Persistent exchange rate gaps, low reserve buffers, and fiscal unpredictability are as much a threat to mining investment as a drop in global commodity prices.
The path forward requires more than just weathering the next economic storm. It demands building a more resilient and diversified economic structure. The choices made today, while gold revenues are high, will determine whether Zimbabwe can transform this period of growth into a lasting era of prosperity or whether it will once again find itself vulnerable when the global market shifts. The golden shield is strong for now, but the foundation it protects needs urgent reinforcement.
