IMF says Zimbabwe economy to grow 6%, deep reforms needed

HARARE: The International Monetary Fund forecast that Zimbabwe's economy would grow 6% this year, almost double its initial projection, but said debt restructuring and other reforms were needed to create the conditions for a lasting recovery.

The Fund said higher agriculture output and improved power generation and manufacturing activity meant its previous estimate of 3.1% had been superseded. "An economic recovery is underway in 2021," it said in a statement late on Wednesday after a two-week virtual meeting with local authorities.

The IMF's new projection is also higher than the 3.4% growth forecast by the World Bank last week, while President Emmerson Mnangagwa's government expects growth of 7.4% this year.

But even before the COVID-19 pandemic, the southern African nation had been throttled by drought, rolling electricity cuts, foreign currency shortages and money printing that drove inflation to more than 800% last year.

The World Bank estimates that nearly half the 15 million population live in extreme poverty.

Analysts say the recovery will remain fragile without outside support, and the IMF called for "durable macroeconomic stability and structural reforms".

The southern African nation owes more than $8 billion in external debt, most of it in arrears, and does not qualify for new IMF funding after defaulting on its loans in 1999.

The Fund said any financial package would require "a clear path to comprehensive restructuring of Zimbabwe's external debt, including the clearance of arrears and obtaining financing assurances from official creditors... and governance and transparency reforms."