IMF predicts 3% growth deceleration in 2024

Oscar J Jeke

The International Monetary Fund has said Zimbabwe’s economic growth in 2023 was 5.3% but it is expected to slow down in 2024 by 3% due to drought as well as existing exchange restrictions.

The remarks by the IMF mission come as authorities had requested for a Staff-Monitored Programme to support their stabilisation efforts and re-engagement with the international community facilitated by their sound economic policies, with discussions over macroeconomic stability and establishment of an effective framework for the exchange rate taking centre stage.

In his review of the request, the leader of the IMF mission, Wojciech Maliszewski noted that the deceleration in this year owes to a number of factors such as reduced agricultural productivity due to the impact of drought and the wide gap between the official exchange rate and the parallel market.

“Growth is expected to decelerate to about 3% in 2024, partly reflecting the impact of a drought on agricultural production and lower commodity prices,” Maliszewski said.

Observations were also made on the restoration of macro-economic stability and addressing the sources of fiscal pressures that include liberalising the foreign exchange market and establishment of a viable and effective framework for monetary policies.

Recommendations made to the authorities in the conclusion of the mission were that authorities accelerate reforming the FX market through discovery of a market driven price and the removal of the exchange rate distortions that include the restriction for trading margins for pricing domestic transactions to 10 percent.

“The FX market reform should be accompanied by establishing an effective framework for exchange rate and monetary policies. Establishing such a framework requires careful preparations, including, among other steps, comprehensively addressing underlying sources of fiscal pressures,” Maliszewski added.

Structural reforms aimed at improving the business climate, debt resolution through international re-engagement and the amendment of the RBZ Act to narrow its legal mandate were other observations and advises given to the authorities to promote sound economic viability.