ECONOMIC OUTLOOK
The Minister of Finance, Economic Development & Investment Promotion, Prof Mthuli Ncube, delivered
the highly anticipated 2026 National Budget, on the 27th November 2025, under the theme “Enhancing drivers of economic growth & transformation towards
Vision 2030.” This analysis distils strategic findings, macroeconomic developments, & emerging policy directions, shaping Zim’s current & future business environment.
The budget reflects a positive economic trajectory, in
line with transition to National Development Strategy 2 (NDS2), in Zim’s endeavour, to achieving upper
middle-income economy, by 2030, through continued restrictive fiscal mgt, cash budgeting, alignment of key
sectors & policy reforms. Budget comes amidst volatile global markets, climate change, ongoing
geopolitical tensions, trade tariffs, & reduced support
from development partners. Reform trajectory focuses on consolidating stability,
supported by improved economic growth, in key
priority areas, underpinned by NDS2 core principles
namely housing dvt, agri food security, climate
resilience, environmental protection, science & tech,
innovation, digitalization, human & capital dvt, job
creation, youth dvt, creative industry & culture, social
dvt, gender & social protection, regional inclusive
decentralized dvt, image building, international
relations & trade, good governance, institution
building, peace & security.
Economy predicted to grow 5% in 2026, down from
6,6% in 2025 (nominal GDP of US$52,4 billion in 2025),
with 2026 forecast, almost double projected global
economic growth, of 3,1% for same period. Economic
growth by sector contribution, mining (0,9%), finance &
insurance (0,7%), manufacturing & agri each
contributing (0,6%) with remaining 2,3% contributed by
other sectors. IMF country assessment, November
2025, projected strong economic growth momentum,
to carry forward into 2026.
2026 projected economic growth, by sector,
wholesale & retail (7,4%), electricity generation (6,5%),
mining (6,3%), agri (5,4%), manufacturing (3,7%), &
tourism (3,1%). Manufacturing, country’s largest sector,
capacity utilization, currently stands at 57%, projected
to expand to 60% in 2026. NatPharm to procure 49
product lines, exclusively from local manufacturers, as
promotion of local industries intensifies. Mutapa
Investment Fund to resuscitate & return to profitability
53% of fledging State-Owned Entities, following
US$100 million, cash injection.
Anticipated growth spurred by assumptions of normal
to above normal rainfall, improved electricity
generation, currency exchange rate, inflation & price
stability, moderation in global commodity prices,
rationalisation, & review of ease of doing business
reforms. Budget increase necessitated by channelling
funds to key priority areas like public services,
education, health, social protection, human capital,
which take up about 50% of 2026 budget allocation,
amidst efforts to enhance revenue mobilisation, whilst
safeguarding fiscal sustainability. To finance budget,
domestic revenues expected to reach US$9,4 billion
(16,9% of GDP) in 2026, made up of US$9,2 billion in tax
revenue & US$200 million in non-tax revenue, against
expenditure of US$9,5 billion, leaving a deficit of
US$105 million (0,2% of GDP). Current budget
utilization stood at 75% at Q3 2025, whereas fiscal
surplus was ZIG $3,7 billion.
Need for gvt intervention, & real time monitoring of line
Ministries, to curb wasteful expenditure, &
misallocation of resources, with Auditor General
capacitation earmarked to receive ZIG $764,4 million
in 2026. Balancing act required, between improving
conditions of service, operational efficiency,
rationalising staff vs bloated expenditure, as gvt wage
bill anticipated to consume 53% of revenue in 2026.
Vital need to strengthen human capital development
in Zim, as National Skills Audit Report revealed
country’s critical skills base stands at 38,3%, with a
skills deficit of 61,7%, following continuous years of
brain drain.
RBZ expected to maintain cautious stance, with
tightened monetary policy, holding interest rates firm,
to halt inflation, amidst prevailing environments.
Interbank exchange rate averaged ZIG $26,69: US$1
as at Q3 2025, with the parallel market rate trading at a
20% premium. ZIG annual inflation projected to reduce
to single digits in 2026, towards alignment with global
inflation figures of 3,7% for 2026.
Foreign currency receipts gained marginally to US$12
billion at end of Q3 2025, up from US$10 billion in
previous corresponding period. Export receipts &
diaspora remittances account for 59,2% & 14,8% of
total forex receipts. Diaspora remittances projected to
surpass US$2,8 billion in 2026. Current account
surplus projected to increase to US$1,4 billion in 2026,
from US$1,3 billion in 2025, buoyed by export growth
& diaspora remittances.
At end of Q3 2025, Total Public Guaranteed Debt was
US$23,4 billion (44,7% of GDP), compared to US$21,5
billion in 2024). Reserve money at Q3 2025, ZIG$26,2
billion, with ZIG reserve money adequately covered,
five times by foreign currency reserves. Foreign
currency reserves cover, US$800 million (one month’s
import bill).
2025 year-end revenue collections projected at
US$7,93 billion, against expenditure of US$8,1 billion,
leaving budget deficit of US$140 million. Tax revenue,
accounted for bulk of collections, making up 96% of
the said funds, & non-tax revenue at 4%.
Projected annual fiscal revenue collections forecasted
at US$8.7 billion in 2026, against a projected fiscal
expenditure of US$9,4 billion, resulting in fiscal deficit
of US$722 million (1,4% of GDP). Key tax revenue
contributors are VAT, Income Tax, Excise Duty,
Customs Duty, Corporate Income Tax & IMT Tax.
To year end 2025, export projections to grow to US$9,6
billion, an increase of 23,3% from previous
corresponding period, buoyed by record tobacco
sales, historic highs, in gold prices, ferrochrome &
manufactured products. In 2026, exports projected to
increase by 5,8% to US$10,2 billion.
To year end 2025, imports anticipated to peak at 5%
increase at US$9,6 billion driven by fuel, food, &
electricity imports. In 2026 imports are set to increase
by 4,2% to US$10 billion, on account of imports of
energy, raw materials & machinery.
Projected exports growth in 2026 anticipated at 5,8%,
marginally ahead of imports at 4,7%, sustaining a trade
surplus.
Foreign Direct Investment (FDI) grew to US$799
million in 2025, projected to grow to US847 million in
2026. By end of Q3 2025, ZIDA issued 203 Investment
Licenses worth US$3,3 billion, a 20% rise from 2024.
ZSE turning point, as it self-listed, it’s shares on ZSE, in
line with international best practices, transitioning from
broker-owned bourse, to publicly traded entity. VFEX,
all share index recorded 44,9% increase to 150,8 points
as at end of Q3 2025, in sharp contrast to ZSE all share
index, which declined by 3,2% to 210,6 points.
Banking, Insurance & Pensions Sectors saw marginal &
steady growth. Sectors expected to remain profitable
in 2026.
POLICY MEASURES
De dollarization roadmap to mono currency outlined,
with undertaking to honour all prior obligations, post
currency change date. Proposed policy remains
precarious balancing act between, need for long term
stability, fostering economic growth, making local
business more competitive versus previous
hyperinflationary fears, loss of market confidence &
policy inconsistency, resulting in wiping out of savings
on numerous occasions.
Intermediate Monetary Transfer Tax (IMTT) on ZIG
denominated transfers reduced to 1,5% from 2%, with
IMTT Tax now a tax-deductible expense in both USD &
ZIG. IMTT Tax reduction is a trade off with 0,5% VAT
increase to 15,5% from 15%.
Introduction of 2-3% forex withdrawal levy at banks,
coupled with mandatory ZIMRA registration for
properties, where commercial activities carried out,
with 10% of rental income levied as Tax. All corporate
bank accounts & merchant wallets, now required to
have a TIN Number, with all transactions
automatically transmitted to ZIMRA.
Ownership & trade of gold bars by national gold
refineries, authorised dealers & pvt individuals to be
legalized. Introduction of sliding scale of royalty
payments, by gold producers, from 3% to 10%,
depending on quantities. Introduction of 10% export
tax, on un beneficiated lithium ore & concentrate,
antimony, black granite & 5% on chrome respectively,
payable in forex & a 2% CSR tax on coal.
Sin Tax sees increase in Book Makers Tax to 20% of
gross revenue with punters set to pay tax on winnings. Introduction of withholding tax in lieu of VAT on streaming services, digital services, e-hailing, & digital content.
Gvt to avail funds to complete Harare-Beitbridge & Harare-Victoria Falls roads in 2026, coupled with
erection of new tollgates & renovations of existing ones. J. M Nkomo airport & smaller airports to be refurbished & spruced up, in 2026 Abolished multiple
licencing regimes, to improve ease of doing business,
enhance competitiveness, relieve fiscal pressures associated with over taxation, & burdensome
regulatory requirements. To date reforms in five sectors, namely tourism, transport, wholesale & retail,
energy, livestock dairy & feedstock, manufacturing,
with seven sectors still outstanding. Suspension of customs duty on components used in
gas manufacturing, & tax reliefs, deductions, incentives on companies, transiting to twenty-four
economy operations, & those establishing businesses & knowledge outsourcing (call centres).
Customs Duty on conventional public services buses suspended to 10%, whereas that on electric public
services buses, suspended in full. Measure to protect local cotton industry, sees introduction of customs
duty of 40%, plus US$2,50 per kg, on select polyester and cotton products. US$30 million set aside to compensate former white commercial farmers in 2026. Zim to host as base of Intra African Trade Fair Company, aligning it to take centre stage in African trade.

BUDGET ALLOCATIONS AT A GLANCE

Pry & Sec. Ed, collectively with Higher & Tertiary Ed allocated ZIG $57,7 billion (18,5% of budget) broken down as ZIG $47,4 billion and ZIG $10,3 billion respectively. Allocations align with gvt’s heritage-based education, & education 5.0 policies,
aimed at shifting learning models, from knowledge-driven, to practical skills, innovation &
industrialization driven models. 300 ICT Labs to be est, round the country in 2026, as gvt seeks to ensure every
school has ICT LAB & access to internet, considering AI outlook.
Health sector distant second, allocation of ZIG $30,4 billion (10% of budget), which may be inadequate, to address challenges in sector, plagued by funding & staff shortages, coupled with withdrawal of funding
partners. Allocation progressing towards international benchmarks, more so 15% figure for health, designated
by AU leaders, at Abuja Declaration. Third in line is Ministry of Finance, with an allocation of
ZIG $28,2 billion (9%) of total budget allocation. Agriculture allocated ZIG$ 26,8 billion (8,6%) of total
budget, below 10% figure adopted in 2014, by AU leaders, at Malabo Declaration. Renewed optimism
following 2025 harvest, with record wheat yields, & record tobacco sales, & anticipated successful
2025/2026 season. Ministry of Defence, which oversees maintenance of country’s security, sovereignty & supporting civil authorities in emergencies closes off top five allocations with allocation of ZIG $19,8 billion (6,3%). Collectively security cluster allocated ZIG $46,8 billion, in line with mandate for peace & security. The 2026 National Budget charts country on a strategic roadmap towards achieving an upper middle-income economy, by 2030, whose outcome requires careful harmonisation of numerous stakeholder interests.