Business Reporter
THE International Monetary Fund has applauded Zimbabwe for adopting a prudent monetary policy that has seen Government maintaining tight fiscal discipline while containing inflation and stabilising the exchange rate.
IMF African Department director, Mr Abebe Aemro Selassie, told journalists during the presentation of the new regional economic outlook for sub-Saharan Africa at the IMF-World Bank Annual Spring Meetings in Washington DC, United States, this week that Zimbabwe’s policies have contributed to solid economic performance, even in the absence of the concessional financing that other countries in the region use.
He said the “diminished recourse” to the Reserve Bank of Zimbabwe financing window has been a key move of recent policy efforts now helping to achieve progress towards restoring macro-economic stability in an economy long plagued by hyperinflation and exchange rate volatility.
“Zimbabwe has gone through quite a lot of challenges in recent years . . . and one of the things that distinguishes Zimbabwe from other countries in the region has been that they have not been able to access concessional financing to the same degree that others have, helping defray the impact of all of these global shocks of recent years,” said Mr Selassie.
“Against this difficult backdrop, it has been good to see that . . . the country has been trying to put in place the right policies.
“Recourse to central bank financing has diminished quite a bit. It will be important to sustain that because it’s this repeated recourse to central bank financing that has created a lot of difficulties in the past, also with inflation, with exchange rate volatility and the difficult foreign exchange environment that the country has. So, we are encouraged by what the Government has been doing in recent months, and I think that needs to be sustained.”
Presenting his first Monetary Policy Statement on April 5, 2024, soon after he was appointed RBZ Governor early last year, Dr John Mushayavanhu pledged to stop quasi-fiscal activities at the central bank.
“I don’t believe in quasi-fiscal activities; it’s not going to happen under my watch. My mandate, as spelt out in the Reserve Bank Act, is very clear and I have no intention whatsoever to do other people’s jobs. In that respect, we have moved all quasi-fiscal obligations that had been created, some not of our making (as RBZ) . . . but that is in the past, we are not going to be doing any quasi-fiscal operations,” Dr Mushayavanhu said.
He emphasised that his mandate, as defined by the RBZ Act, was strictly monetary policy, and he had no intention of encroaching on the duties of other Government departments.
Essentially, he promised to stick to the central bank’s core job.
The central bank noted in its latest snapshot on monetary, currency, price and currency developments for the third quarter released last week that inflation was projected to remain low and stable, underpinned by a tight monetary policy. “The central bank is operating well within its inflation target, with annual inflation expected to be less than 20 percent by December 2020, which is aligned with the projected economic growth of 6 percent,” the RBZ said.
It said the ZiG monthly inflation had averaged 0,5 percent between February and September 2025 and is forecast below 3 percent for the rest of the year.
The exchange rate, the bank noted, as reflected by the interbank exchange rate, oscillated around ZiG26,76 per US dollar during the third quarter of 2025.
“The parallel market premium has also been declining towards convergence with the interbank rate, with the remaining gap being explained by the illegality premium and search costs associated with risks of obtaining foreign currency on informal channels,” the RBZ said.
In its recent Article IV consultation, the IMF Executive Board formally acknowledged that
the decisive halting of quasi-fiscal operations and monetary financing was the key development that has allowed Zimbabwe to achieve a degree of macroeconomic stability and lower inflation.
The halting of quasi-fiscal operations had been instrumental in supporting the stability of the Zimbabwe Gold (ZiG) currency.
Since its debut, the RBZ has actively worked to promote its use alongside the multi-currency system, and official data now indicates an increased proportion of transactions are being conducted in ZiG.
The ZiG is currently trading at approximately 26,71 per US dollar. It has maintained a relatively stable trajectory since the central bank devalued the currency by 43 percent on September 27, 2024.
The IMF noted that the economic outlook for Sub-Saharan Africa is showing resilience, despite a challenging external environment marked by uneven commodity prices, tight borrowing conditions, and a deteriorating global trade and aid landscape.
Regional economic growth is projected to remain steady at 4,1 percent in 2025 with a modest pickup in 2026, supported by macroeconomic stabilisation and reform efforts in key economies. The resilience, however, cannot be taken for granted.
Overlapping monetary, financial, external, and fiscal vulnerabilities persist across much of the region. To bolster macroeconomic stability while still funding essential development needs, the IMF urged countries to focus on domestic revenue mobilisation and strengthened debt management.
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