World Bank urges Zim to consolidate fiscal policy
THE World Bank has advised Zimbabwe to continue to strengthen its fiscal policy to help move the country towards a sustainable medium-term fiscal pathway.
The global lender said this in its Public Finance Review (PFR) report titled “Anchoring Macroeconomic Stability through Fiscal Policy”, which examined the performance of Zimbabwe’s public finances between 2019 and 2023.
In its review findings, the World Bank also implored Zimbabwe to continue implementing measures to stabilise prices and eliminate exchange rate distortions to boost Government revenues.
According to the findings of the bank’s PFR, Zimbabwe lost over US$4,5 billion between 2020 and 2023 due to monetary distortions. As such, the World Bank said enhancing price stability could help recover inflation-related tax losses promptly.
The World Bank said potential reforms to increase tax revenue included streamlining corporate tax incentives, strengthening mining, property and wealth taxation, aligning health excise taxes in line with international standards, and improving tax administration using digital technologies.
It said resolving the issues could move Zimbabwe towards a more sustainable medium-term fiscal pathway, which would help stabilise the macroeconomic environment and support sustainable economic growth and job creation.
This comes as Zimbabwe’s fiscal and monetary authorities have already embarked on reforms aimed at restoring Zimbabwe’s macroeconomic stability. Through tight fiscal and monetary policies, Zimbabwe has stabilised the exchange rate and forced a downtrend in the once rampant inflation.
The Reserve Bank of Zimbabwe (RBZ) in its 2025 Monetary Policy Statement pledged to maintain a tight monetary policy stance to maintain economic stability and facilitate growth, projected at 6 percent in 2025.
As part of its commitment to a tight monetary policy stance, the central bank kept the bank policy rate at 35 percent per annum.
“The World Bank is fully committed to deepening its cooperation with the Government of Zimbabwe and meaningfully contributing to Zimbabwe’s Vision 2030 to achieve rapid growth and poverty reduction.
“Zimbabwe Public Finance Review therefore comes at a critical time, seeking to identify options for the government to engage in fiscal consolidation which include expenditure rationalisation and increased revenue mobilisation to help move Zimbabwe towards a more sustainable medium-term fiscal pathway.
“This can help stabilise the macroeconomic environment by providing an anchor for price and exchange rate stability, bolstering economic growth and job creation,” said World Bank Country Director for Malawi, Tanzania, Zambia and Zimbabwe, Mr Nathan Belete, in a note in the FPR.
According to the PFR, a well-managed fiscal policy can serve as a vital foundation for durable macroeconomic stability, enabling the creation of a reliable and efficient national budget, which supports a stable and competitive currency.
Ultimately, this would lead to higher growth, marked poverty reduction and significant progress towards achieving Zimbabwe’s development objectives. World Bank country manager for Zimbabwe Ms Eneida Fernandes said that the PFR highlighted the bank’s dedication to providing prompt and effective support to Zimbabwe’s Government, demonstrating the strength and continuity of their partnership.
“The PFR emphasizes the World Bank’s commitment to providing timely and responsive support to the Government of Zimbabwe and is a testament to our strong and ongoing partnership. “This comprehensive analysis of public finance will guide our efforts to assist the government in improving domestic revenue mobilisation, enhancing efficiency, and ensuring pro-poor outcomes,” she said.
According to the World Bank, there is potential to improve the Government’s allocative efficiency to enhance value-for-money in areas such as health care and capital investments.-herald
