Overview

  • Zimbabwe’s economy is at a crossroads. The country faces challenges relating to fiscal consolidation and financial sector stabilization; stimulating growth and investment to increase revenue collection and foreign exchange generation; protecting social gains; and improving governance outcomes through continued legislative and institutional reforms. 

    However, the recently-announced Transitional Stabilization Programme 2018-2020 contains the government’s plans to ensure financial stabilization, stem current liquidity challenges that have seen parallel market exchange rates skyrocket and contribute to inflationary pressures, as well as attract foreign direct investment and improve the balance of trade to boost economic growth. Buoyed by a “new dispensation” that began in November 2017, the country has been championing a “Zimbabwe is open for business” campaign as the start of its transition from a publicly-led economy to a private sector-led economy to chart the way to “Vision 2030” (an upper middle-class income status by 2030). 

    In 2015, after a period of recovery (2010 to 2014), Zimbabwe’s economy began a downward trend, that saw a decline in gross domestic product (GDP) growth due to a drought and fall in commodity prices; an expansionary fiscal policy that led to a burgeoning fiscal deficit; rising vulnerability and poverty because of weather and financial shocks; and acute foreign currency shortages dampening demand and supply.

    Consequently, Zimbabwe’s unsustainable fiscal deficit widened from 8.5% in 2016 to 15.2% in 2017 and is projected to surpass that level in 2018. The government is financing the fiscal deficit largely through domestic borrowing from both commercial banks and Central Bank using an overdraft facility. The overdraft created electronic deposits or Real Gross Time Settlement (RTGS) in the banking system allowing the government to make payments without concomitant increases in US dollar cash balances. This resulted in a mismatch between $US cash balances and RTGS balances. Cash US$ versus RTGS dollar exchange rate weakened (from US$1:1.4 RTGS in January 2018 to over 1:2 at end September 2018), while inflation increased averaging 3.1 percent during the first 7 months of 2018 compared to 0.2 percent during the same period last year.

    The current account deficit narrowed for three successive years to 2017 partly due to import restrictions and recovery in exports, and these positive signs of recovery extended into 2018 through growth in tobacco, cotton, gold and tourism outputs. However, the trend is expected to be reversed in 2018 as trade deficit widened by 27% to US$1.5 billion year-on-year during the first seven months of 2018.

    The year 2018 is marked by subdued economic growth –projected at 3%, down from 3.2% in 2017. However, the outlook (economic growth and fiscal situation) for the second half of 2018 and beyond hinges on how fully the government will implement fiscal consolidation measures and how fast Zimbabwe will re-engage with the international community as the country continues to seek a sustainable solution to its arrears clearance.

    Recent forecasts regarding a likely El Nino event in 2018/19, could lead to a drought. According to the Zimbabwe Vulnerability Assessment Committee, the number of food insecure people is expected to increase between July 2018 and March 2019 among 28% of the rural population. In addition, Zimbabwe is currently grappling with a cholera outbreak which has led to more than 6,000 reported cases and 50 deaths. While urgent measures to improve infrastructure have started, given the scale of the infrastructure deficit, they are inadequate and significant investments will be required to eliminate the threat of disease in future.

    Last Updated: Oct 31, 2018

  • World Bank Group (WBG) assistance to Zimbabwe totaled $1.6 billion between 1980 and 2000. Since 2000, when direct lending was suspended because of non-payment of arrears, the Bank has maintained support for Zimbabwe through a variety of non-lending instruments and trust funds. This support has been governed by three successive Interim Strategy Notes (ISNs) presented to the World Bank Board of Executive Directors in in August 2005, April 2007, and April 2013.

    Zimbabwe’s debt to the WBG is more than $1.4 billion, with more than $1.1 billion in arrears. 

    In the meantime, WBG support has been financed by trust funds (TFs), including the Zimbabwe Reconstruction Fund, its predecessor, the Zimbabwe Analytical Multi-Donor Trust Fund, the Multi-Donor Health Results Innovation Trust Fund- Global Financing Facility (HIRTF-GFF),  the State and Peacebuilding Fund, the Global Environmental Facility Trust Fund, Cooperation in International Waters, and other smaller TFs.

    Joint Needs Assessment

    In December 2017, the Government of Zimbabwe requested support from the African Development Bank (AfDB), United Nations (UN), WBG, and other partners to assess the scale and scope of challenges and needs in Zimbabwe. In response to this request, the three organizations have carried out the first phase of a Joint Assessment, which has focused on compiling and analyzing existing information and data about challenges and needs in Zimbabwe across 24 different sector and thematic areas.

    From 2015 to 2016, under ZIMREF, the following programs  began implementation:

    •  A results-based budgeting Technical Assistance (TA) program ($1.3 million) supports the implementation of program-based budgeting across all central government line ministries
    • A Capital Budgets TA ($4.3 million) supports the improvement of state-owned enterprise governance, public investment planning and management, and the review of the transport sector institutional framework with support to aviation and road tolling reforms.
    • Poverty Monitoring and Evaluation Technical Assistance ($1.9 million) supports statistical capacity building with the 2017 Poverty Income Consumption and Expenditure Survey
    • Public Procurement Modernization Project ($2 million) supports the alignment of the public procurement legislation and institutional framework to the 2013 Constitution,
    • Public Financial Management Enhancement Project ($10 million) to improve financial reporting, internal controls, fiscal transparency and accountability in government finances
    • National Water Project ($10 million) to improve access and quality of water and sanitation services in seven small town growth centers, improve water resources planning, and support the reforms in the water sector nationally
    • The Business Environment, Financial Sector and Investment Policy TA ($3.2 million) to improve the business climate for the private sector, especially for micro enterprises, SMEs, and agricultural smallholders
    • A Climate Change TA ($1.5 million) to strengthen the capacity of the government to integrate climate change into investment planning in forestry, agriculture, and the water/energy nexus. 

    Last Updated: Oct 31, 2018

  • Through the Multi-Donor Trust Fund for Health Results Innovation Trust Fund- Global Financing Facility (HIRTF-GFF), more than 777,000 women have received antenatal care services through at least one visit at supported facilities since inception, while more than 100,000 pregnant mothers have delivered in the facilities on an annual basis. Slightly more than 583,000 children have received full immunization since program inception. The impact evaluation of the program confirmed the approach resulted in faster rates of improvements in key maternal and child health indicators e.g there was a 13% improvement in the in-facility delivery rate and a 12% improvement in postnatal care in results-based-financing (RBF) districts, compared to those that had not yet started the approach. The project is increasing maternal and child health intervention in rural districts serving over 4.5 million people and expanding community involvement.

    Technical and Analytical Work

    With funding from the Zimbabwe Reconstruction Fund and building on earlier funding from Department for International Development (DfID), USAID’S SERA and African Development Bank, the Ministry of Finance and Economic Development led the pilot preparation of 2017 program-based budgets for three Ministries (Labor, Health and Education). For the 2018 National Budget, five more Line ministries were assisted to adopt program-based budgeting.

    ZIMREF also provided support to the government in the development of the Public Entities Corporate Governance Act to enhances corporate governance, transparency and accountability clearing the way for improved performance in public entities.   

    The Business Environment Financial Sector Investment Policy Technical Assistance (BEFSIP TA) supported efforts to update 13 pieces of legislation and associated regulations. Nine pieces of legislation have been enacted into law including the Judicial Laws Amendment (Ease of Settling Commercial and Other Disputes) Act, Deeds Registries Amendment Act, Insolvency Act and the Movable Property Security Interests Act. The TA is currently supporting the government on the development of an Investment Law to implement the Investment Policy Statement produced in January 2018.

    Through the Procurement Project, the government received support on the development of a Public Procurement and Disposal of Public Assets Act and related regulations. The act, which became effective on January 1, 2018, established the new Procurement Regulatory Authority of Zimbabwe. 

    The Health Sector component of the Results-based Budgeting TA supported efforts by the government and other development partners in the production of the launch of the Zimbabwe National Health Financing Policy; and National Health Financing Strategy.

    The Poverty Monitoring and Evaluation TA supported the government in developing a legal framework for the sharing of micro-data for further analysis. A statutory instrument on micro-data dissemination has been gazetted, enabling advanced poverty analysis and policy simulations.  

    Last Updated: Oct 31, 2018

  • In 2014, the World Bank Board of Executive Directors approved the Zimbabwe Reconstruction Fund (ZIMREF), a country-specific umbrella-type multi-donor trust fund that contributes to strengthening Zimbabwe’s systems for reconstruction and development.

    ZIMREF is the key instrument for implementing the Bank’s Third Interim Strategy Note for Zimbabwe. ZIMREF has received $42.4 million from Denmark, the European Union, Norway, Sweden, Switzerland, the UK, and the World Bank’s State and Peace Building Fund.

    The (HIRTF-GFF)’s,  financing grant of $53 million from the  complements Zimbabwe’s ongoing Health Sector Development Project that supports the introduction of Results-Based Financing in rural and low-income clinics, the piloting of voucher programs in urban clinics, and quality intervention throughout.. Government’s counterpart contribution is US$21.2million. Cordaid is the implementing partner.

    Development partners also include:

    • The Cooperation in International Waters in Africa: $6 million grant to support preparation of the Zambia–Zimbabwe, Batoka Gorge Hydro-Electric Scheme.
    • The Global Environmental Fund: $5.6 million grant for the Hwange Sanyati Biological Corridor Project to develop land use and resource management of local communities and support investments in alternative livelihoods, improved forest management, and reverse land degradation, is implemented by the World Wildlife Fund Zimbabwe.
    • The Global Facility for Disaster Reduction and Recovery: $600,000, grant financing for a Natural Disaster Risk Reduction disaster project in Kariba district implemented by the Danish and Zimbabwe Red Cross.
    • The European Union, AfDB, ZRA, and Embassy of Sweden are funding the Kariba Dam Rehabilitation Project. The $294 million is for safety operations for the dam.

    Last Updated: Oct 31, 2018

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LENDING

Zimbabwe: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

Main Office Contact
Block 3, Arundel Business Park
107 Norfolk Road, Mount Pleasant
Harare, Zimbabwe
(+263-4) 369-130/1
For general information and inquiries
Cheryl Khuphe
Communications Officer
(+263-4) 369-130/1
ckhuphe@worldbank.org
For project-related issues and complaints
zimbabwealert@worldbank.org