This chapter was prepared by a team led by Papa N’Diaye, coordinated by Nkunde Mwase and composed of Seung Mo Choi, Jesus Gonzalez-Garcia, Cleary Haines, Andresa Lagerborg, Miguel Pereira Mendes, and Torsten Wezel.
This chapter was prepared by a team led by Siddharth Kothari and comprising Xiangming Fang, Lisa Kolovich, Cameron McLoughlin, Monique Newiak, Rasmane Ouedraogo, Brooke Tenison, Jiaxiong Yao, and Mustafa Yenice, under the supervision of Mahvash Qureshi and David Robinson.
This chapter was prepared by a team led by Geremia Palomba, coordinated by Reda Cherif and by Yunhui Zhao and comprising Russell Green, Salifou Issoufou, Tomas McGregor, Adrian Peralta-Alva, Amadou Sy, Bruno Versailles, and Jason Weiss. Research assistance was provided by Hilary Devine and Miguel Pereira Mendes.
The economic recovery in sub-Saharan Africa is expected to continue, but at a slower pace than envisaged in October 2018. This weaker outlook reflects domestic and external challenges. On the external side, the global expansion is losing momentum, including in China and the euro area, trade tensions remain elevated, global financial conditions have tightened, and commodity prices are expected to remain low. On the domestic front, security challenges, climate shocks, and policy uncertainty are hampering investment and weighing on economic prospects in several countries. Under current policies, medium-term average growth for the region is expected to continue to fall well short of what is needed to absorb the new entrants to the labor force and to deliver limited gains in living standards.
suspension of technical assistance (which had already been partially lifted, see Press Release No. 09/152 and Press Release No. 12/405); and (iii) the removal of Zimbabwe from the list of PRGT-eligible countries (see Press Release No. 01/40).
Zimbabwe is now current on all its financial obligations to the IMF. Its eligibility to the PRGT has also been restored.
On February 20, 2019, Zimbabwe introduced a new domestic currency—named the Real Time Gross Settlement (RTGS) dollar—and adopted a de jure floating exchange rate arrangement
denominated in US dollars, these deposits began trading domestically at a discount versus the US dollar, and become known popularly as RTGSdollars. 2 Amid strict capital controls and deposit withdrawal restrictions, a parallel market developed to trade RTGSdollars for foreign exchange. Electronic RTGSdollars were also complemented by physical quasi-currencies, first with the introduction of bond coins in 2014, and later of bond notes in November 2016.
Text Figure 1. Zimbabwe: Domestic Financing, 2014–19
(in percent of GDP)
Sources: Zimbabwean authorities and
sworn into office following the July 2018 elections tightened the fiscal stance since September 2018 and introduced a new domestic currency (the “RTGSdollar”) in February 2019. The authorities are also advancing on structural reforms as elaborated in their Transitional Stabilization Program (TSP), which seeks to achieve macroeconomic stability and aims at reforming and privatizing state-owned enterprises (SOEs), addressing corruption in procurement and revenue administration, and promoting private-sector investment by improving the business climate.
financial obligations to the IMF. Its eligibility to the PRGT has alsobeen restored.
On February 20, 2019, Zimbabwe introduced a new domestic currency—named the Real Time Gross Settlement (RTGS) dollar—and adopted a de jure floating exchange rate arrangement, previously a “no separate legal tender” arrangement. The Reserve Bank of Zimbabwe (RBZ) denominated legally, through Statutory Instrument (SI) 33 of 2019, the existing RTGS balances, bond notes and coins in circulation as RTGSdollars making them part of the multi-currency system in Zimbabwe
This 2019 Article IV Consultation focuses on Zimbabwe’s near- and medium-term challenges and policy priorities and was prepared before COVID-19 became a global pandemic that has resulted in unprecedented strains in global trade, commodity, and financial markets. It, therefore, does not reflect the implications of these developments and related policy priorities. The outbreak has greatly amplified uncertainty and downside risks around the outlook. The IMF staff is closely monitoring the situation and will continue to work on assessing its impact and the related policy response in Zimbabwe and globally. With another poor harvest expected, growth in 2020 is projected at near zero, following a sharp contraction in 2019, with food shortages continuing. With no progress on clearing longstanding external arrears, the authorities face a difficult balance of pursuing tight monetary, to reduce very high inflation, and fiscal policies to address the macroeconomic imbalances and build confidence in the currency, while averting a crisis. Pressures are mounting to increase spending on wages and for social protection to mitigate the impact of the weather shocks and high inflation. While the 2020 budget includes a significant increase in social spending, it is likely insufficient to meet the pressing needs.
settlement (RTGS) dollar, later renamed the Zimbabwe dollar, and are in the process of redenominating their national accounts statistics. Current data are subject to revision. The Zimbabwe dollar previously ceased circulating in 2009, and between 2009–19, Zimbabwe operated under a multicurrency regime with the US dollar as the unit of account.
Note: “...” denotes data not available.
Overall Fiscal Balance, Including Grants and Government Debt
Overall Fiscal Balance, Including Grants (Percent of GDP)
Government Debt (Percent of GDP