IMF urges Zimbabwe to save US$275 million for potential 2027 drought

The International Monetary Fund (IMF) has advised Zimbabwe to set aside at least US$275 million from its unexpectedly strong tax revenues to create a fiscal buffer against potential food shortages in 2027. This recommendation follows a review of Zimbabwe’s Staff-Monitored Programme, noting that 2026 revenue is projected to reach approximately US$10.3 billion due to increased economic activity, improved VAT and customs collections, and higher personal income tax receipts.

The IMF suggests that the government should maintain spending within the limits of the approved 2026 budget rather than utilizing the windfall for additional expenditure. This reserve is intended to provide a cushion against a possible El Niño-induced drought late in 2026 or early 2027, which could threaten agricultural output and food security.

To ensure these funds are preserved, the IMF has proposed a new quarterly target to set a floor on government deposits held at the Reserve Bank of Zimbabwe and commercial banks. This measure aims to allow authorities to respond to agricultural shocks without accumulating new domestic arrears or diverting funds from essential social programs.