The International Monetary Fund (IMF) has urged Zimbabwe to save at least US$275 million from stronger-than-expected revenues to cushion the economy against potential food shortages linked to a possible El Niño event.
In its latest review of Zimbabwe’s performance under the Staff Monitored Programme, the Fund commended the country’s improved fiscal position but urged Government to exercise spending restraint and preserve part of the additional revenue.
The IMF said Government should keep expenditure within the approved 2026 budget and use excess revenues to prepare for possible food-security pressures in 2027.
“The authorities should maintain expenditure within the approved 2026 budget and save additional revenues to build fiscal space for potential food-security pressures in 2027,” the Fund said.
Building a fiscal buffer of at least US$275 million would enable authorities to respond swiftly to food-security needs without accumulating new arrears or compromising priority social spending.
Zimbabwe recorded a US$371 million primary cash surplus in the first quarter, about US$320 million above the programme target, while revenue collections exceeded the target by US$560 million.
The strong revenue performance was attributed to increased economic activity, higher VAT and customs collections, improved personal income tax receipts and enhanced tax administration.
The IMF projects Government revenue to reach US$10.3 billion in 2026, equivalent to about 16% of GDP, while the primary cash surplus is expected to average around 1.7% of GDP.
The proposed fiscal buffer is intended to provide room for Government to respond to the effects of a potentially severe El Niño event expected in late 2026 and early 2027, which could disrupt agricultural production and worsen food insecurity.
The Fund warned that climate-related shocks could reduce revenues, and increase Government spending to procure grains to protect vulnerable households.
Finance Minister, Professor Mthuli Ncube, said Government was pursuing measures to strengthen the economy’s resilience to climate and commodity-related shocks.
“These risks underscore the need to intensify economic diversification, enhance value addition and beneficiation, as well as accelerate targeted irrigation development to strengthen resilience to climate-related shocks,” Professor Ncube said in the 2026 Budget Strategy Paper.
The IMF also called on Government to strengthen spending on social protection and priority programmes after Zimbabwe fell US$84 million short of its protected social and priority spending target in the first quarter.
The under-execution affected programmes including the Basic Education Assistance Module (BEAM), Pfumvudza and the Social Protection Management Information System.
Beyond fiscal management, the Fund urged Zimbabwe to cap gold incentives at US$300 million in 2026, clear domestic arrears, further liberalise the foreign exchange market and maintain a tight monetary policy stance.
It also called for continued progress towards external debt restructuring and the clearance of outstanding arrears as Government seeks to strengthen economic stability and restore access to international financing.
