The IMF believes international re-engagement is essential for resolving Zimbabwe’s debt and clearing its arrears.

Zimbabwe needs to secure a full restructuring of its external debt before getting new financial support from the International Monetary Fund (IMF). In a statement issued last week, the institution urged authorities to work on clearing debt arrears and adopting a debt reform plan in line with IMF guidelines. This f=came after a mission to Harare from January 30 to February 13, 2025, as part of a Staff-Monitored Program (SMP).

The IMF cited Zimbabwe’s unsustainable debt and arrears as the reason for this condition. However, the institution will continue to provide policy advice and technical assistance, particularly in revenue collection, spending controls, financial supervision, and economic governance.

In 2023, Zimbabwe sought an SMP to stabilize its economy and reconnect with international lenders to tackle its debt and arrears. Talks have centered on fiscal adjustments to curb monetary financing and new arrears, off-budget fiscal risks, the monetary framework for the ZiG (Zimbabwe’s currency), and governance reforms.

“International reengagement remains critical for debt resolution and arrears clearance, which would open the door for access to external financing,” said Wojciech Maliszewski, head of the IMF mission.

The IMF noted that Zimbabwe’s economy has shown signs of recovery after being hit by an El Niño-induced drought, which slowed growth to 2% in 2024. Remittances from Zimbabweans abroad have helped sustain sectors like trade and construction, and the current account posted a surplus of $500 million (1.4% of GDP).

For 2025, the IMF projects a 6% growth rate, driven by better agricultural conditions and improved trade terms. On the monetary front, the ZiG remained relatively stable after its introduction in April 2024, but later depreciated in September 2024.

Zimbabwe, burdened with $21 billion in debt, remains cut off from international financing and heavily reliant on its central bank. To restore investor confidence, President Emmerson Mnangagwa has enlisted Akinwumi Adesina (President of the African Development Bank) and Joaquim Chissano (former Mozambican president) to lead negotiations. The government has also hired firms like Global Sovereign Advisory and Kepler-Karst to assist in debt restructuring.

Despite strong tax revenues in 2024, the government accumulated arrears, forcing emergency budget cuts, the IMF said. For 2025, Zimbabwe’s debt-to-GDP ratio is expected to drop to 58%, down from an estimated 70.3% in 2024, according to IMF data.