• Protected social and priority spending missed the IMF floor by US$84 million

• Gold incentives reached US$118 million against a US$16 million annual budget
• Revenue outperformed as government generated a US$371 million primary cash surplus

Harare - Zimbabwe entered the first review of its International Monetary Fund Staff Monitored Program with stronger fiscal numbers than initially expected with revenue collection exceeding programme assumptions.

The primary cash balance outperformed its target and monitored domestic expenditure arrears declined during the first quarter of 2026.

Protected social and priority spending moved differently. The IMF found that government missed the agreed expenditure floor by US$84 million, with under-execution recorded across programmes including the Basic Education Assistance Module, Pfumvudza Intwasa and the Social Protection Management Information System.

The spending floor was the only indicative programme target Zimbabwe missed during the first review. The result emerged during a quarter in which government collected approximately US$2.53 billion in revenue and generated a primary cash surplus of US$371 million. Revenue exceeded the programme floor by about US$560 million, while the primary balance finished roughly US$320 million ahead of the programme target.

Monitored domestic expenditure arrears also declined by US$94.6 million.The fiscal numbers establish considerable improvement in Treasury’s control over the aggregate cash position. They also narrow the possible explanation for the protected spending shortfall.

Government had access to stronger revenue than anticipated. The programme ceilings controlling debt, employment costs and other major fiscal variables were observed. The IMF consequently completed the first review while identifying protected expenditure execution as the outstanding weakness.

The composition of expenditure provides further evidence. Total spending during the first quarter exceeded programme projections. Transfers and subsidies were among the areas contributing to expenditure pressure, with gold delivery incentives reaching US$118 million during the quarter.

The 2026 National Budget had provided US$16 million for gold incentives for the entire year. Three months into the financial year, payments had reached more than seven times the original annual allocation. By the end of April, cumulative expenditure had risen to US$141 million.

Gold has become increasingly important to Zimbabwe’s fiscal and external accounts. Higher production and elevated international prices have increased export receipts, supported foreign currency inflows and contributed to the reserve accumulation underpinning monetary stability.

The incentive programme seeks to preserve formal gold deliveries and limit leakages from the official market. Its fiscal cost expanded rapidly as deliveries and gold values increased.

The IMF has now incorporated tighter controls around those payments and called for the continued relevance of the incentive scheme to be assessed during preparation of the 2027 National Budget.

The expenditure pattern establishes two separate execution outcomes inside the same fiscal quarter. Gold incentives moved far beyond their original budget provision. Protected social and priority programmes remained below an expenditure floor specifically established under the IMF programme.

That floor covers programmes with different economic transmission channels. BEAM directs public resources towards education access for vulnerable children. Pfumvudza Intwasa supports agricultural production. SPMIS forms part of the infrastructure through which government identifies and manages social protection beneficiaries.

The timing of expenditure therefore forms part of its economic value. Agricultural support is particularly sensitive to production cycles. The fiscal consequences can extend beyond the initial programme allocation because domestic agricultural output subsequently influences household food security and government grain requirements.

That relationship is gaining relevance as authorities prepare for possible food security pressures in 2027. The IMF has recommended that revenue overperformance be saved to build fiscal buffers against those risks. Its latest assessment identifies a major El Niño event among the downside risks facing Zimbabwe’s economic outlook.

Treasury is therefore managing several claims on the fiscal improvement recorded during 2026. Protected programmes require catch-up expenditure. Gold incentives have already generated costs considerably above their original budget. Debt obligations continue to absorb cash. Additional revenue is also being preserved to strengthen the government’s capacity to respond to future food security requirements.

Debt payments absorbed a substantial part of the first-quarter fiscal strength. Government accelerated amortisation during the period, with repayments reaching approximately US$398 million against US$103 million programmed. The payments included debt and arrears obligations alongside other liability management operations.

The stronger primary surplus consequently supported faster balance-sheet repair while protected expenditure remained below its programme floor. This places the quality of budget execution alongside the headline fiscal balance.

Zimbabwe’s fiscal adjustment has already produced evidence of stronger revenue mobilisation, tighter cash control and declining monitored arrears. Those improvements are central to preventing a return to monetary financing and rebuilding credibility around government finances.

The first IMF review introduces another measurement.Fiscal credibility also depends on whether expenditure explicitly protected inside the adjustment programme is executed within the periods for which it was planned.

Government has attributed part of the first-quarter shortfall to implementation delays and committed to accelerating protected spending during subsequent quarters.

That explanation can now be tested against the next programme results. A recovery in cumulative spending across BEAM, Pfumvudza Intwasa, SPMIS and the other protected programmes would establish that the first-quarter breach was principally an execution timing problem.

A continuing shortfall would move the evidence towards a deeper weakness in the expenditure chain, requiring scrutiny of Treasury releases, procurement, programme administration and beneficiary delivery.

The distinction is material because Zimbabwe’s first-quarter numbers already establish that aggregate fiscal control was functioning.

Revenue was available. The primary balance substantially exceeded target. Monitored arrears declined. Total expenditure was not universally suppressed. Some expenditure categories expanded significantly beyond initial budget assumptions.Protected social and priority expenditure still missed its floor by US$84 million.

The second IMF review will therefore add an important measure to Zimbabwe’s fiscal recovery. The amount of the first-quarter gap subsequently recovered, the programmes receiving the money and the timing of those disbursements will establish whether stronger fiscal discipline is translating into stronger execution of the expenditure government committed to protect.

Equity Axis News