Martin Kadzere
THE Reserve Bank of Zimbabwe will sustain the push towards using a single currency for all internal transactions, leveraging the broad successes of 2025 as a foundation for economic stability while stressing that the transition will be a multi-stage process rather than an overnight shift.
Representing RBZ Governor Dr John Mushayavanhu at the State of the Economy and 2026 Economic Outlook breakfast meeting in Harare yesterday, deputy governor Dr Innocent Matshe said a domestic currency was a non-negotiable prerequisite for national competitiveness.
Regional independent think-tank, the Africa Economic Development Strategies (AEDS), in partnership with Business Times, organised the breakfast meeting.
Since its introduction on April 5, 2024, as a structured currency backed by gold and foreign currency reserves and building on the fiscal discipline by Government since the advent of the Second Republic and now a high level of monetary discipline, the ZiG has achieved remarkable resilience, tamed inflation and stabilised the exchange rate.
It has strengthened against the US dollar by 1,5 percent since the beginning of the year to ZiG25,590 from ZiG25,9807 to US$1.
Dr Matshe reiterated that the adoption of the ZiG as a mono-currency would be dictated by rigorous economic milestones rather than arbitrary deadlines.
Central to this roadmap is the requirement for durable macroeconomic stability, characterised by low inflation and the accumulation of foreign reserves equivalent to at least 3,6 months of import cover.
This is now on the cards as Zimbabwe moves into sustained positive balance of trade, exporting more than it imports.
To ensure the ZiG succeeds, the RBZ is prioritising a unified exchange rate system, stable currency dynamics and a recalibrated tax framework designed to mandate the payment of public services in local currency.
The transition is further anchored by a “back-to-basics” policy cohesion between the Treasury and RBZ, aimed at maintaining sustainable budget deficits and fostering public trust in the financial system.
Borrowing is now only permitted for that part of the capital budget where there is an immediate new stream of revenue that can be used to service the borrowing.
To support this transition, Dr Matshe said durable, modern and secure banknotes would be released late in the first quarter or early in the second quarter of this year.
“Overall, the Reserve Bank will aim to entrench macroeconomic stability in support of the roadmap to mono-currency and attainment of National Development Strategy 2 objectives of realising a prosperous and empowered upper-middle-income society by 2030,” said Dr Matshe.
He said the public should understand that “what is driving mono-currency is not a date, but the condition in which the economy is rapidly transitioning to mono-currency”.
Zimbabwe legalised the continued use of the multi-currency system until December 31, 2030, providing a clear legal framework for the use of the US dollar alongside the local currency.
The previous deadline of 2025 had created significant policy uncertainty.
Banks were reportedly hesitant to offer long-term US dollar loans extending beyond 2025, which threatened to stifle credit growth in the private sector.
Dr Matshe noted that the central bank’s roadmap is bolstered by several milestones achieved over the past year, with key indicators showing a significant cooling of the economy and a stabilisation of the ZiG.
Annual ZiG inflation plummeted to 15 percent by early last year, beating the initial 30 percent target.
Month-on-month inflation remained stable, averaging 0,4 percent since February 2025. This will shortly see annual ZiG inflation falling into single figures.
Dr Matshe hinted that January annual inflation figures, due next week, could reach single digits, meeting the SADC regional benchmarks of 3 to 7 percent.
Foreign currency receipts reached a record US$16,2 billion in 2025, up from US$13,3 billion in 2024, driven by record gold prices.
This drive in exports, with only modest adjustments in imports, had created the positive trade balance.
The interbank exchange rate remained steady at approximately ZiG26 per US dollar, with the parallel market premium contained below 20 percent.
For the first time in recent history, the RBZ reported zero central bank financing of Government expenditure, a move credited to tight coordination with the Ministry of Finance, Economic Development and Investment Promotion.
“I really need to applaud the Ministry of Finance, Economic Development and Investment Promotion for giving us the space to make sure that we restrict central bank financing of Government expenditure,” said Dr Matshe.
Foreign currency reserves climbed to US$1,2 billion by December 2025, providing 1,5 months of import cover.
The reserves now cover the local reserve money stock approximately six times and represent double the value of all total ZiG deposits in the system.
“The Reserve Bank remains committed to keeping money supply growth in check to ensure durable, low and sustainable inflation,” said Dr Matshe.
He noted that local currency money supply growth fell from 10 percent to an average of just 2 percent in 2025.
Zimbabwe is expected to record a strong current account surplus of about US$1 billion in 2025, double the US$500 million recorded in 2024.
Despite a conservative projection of 5 percent growth for 2026, Dr Matshe suggested the outturn could be significantly higher, following an estimated 6,6 percent growth in 2025.
He warned that the “base might change” if 2025 figures are revised upwards, but maintained that the overarching story is one of a positive trajectory.
AEDS executive chairman Professor Gift Mugano noted that Zimbabwe has maintained exchange rate stability since September 2024, with premiums falling below 20 percent.
“There is no one who is asking about exchange rates on a daily basis or anyone who runs to offload ZiG,” said Prof Mugano.
In terms of ZiG use, he anticipates it will continue to gain a foothold in formal markets, but the US dollar will remain dominant for savings.
Despite a positive baseline forecast, Prof Mugano warns that fiscal policy slippage, if not carefully watched, remains the primary threat to national economic stability.
To safeguard the disinflation trajectory and protect the ZiG, he called for a “non-negotiable” commitment to budget discipline and a zero-tolerance stance on quasi-fiscal operations.
Interest rates should remain restrictive throughout 2026, shifting from administrative controls to market-based liquidity management.
Authorities must prepare for exogenous shocks, Prof Mugano said, including potential oil price hikes driven by geopolitical tensions in the Americas following the US interference in Venezuelan politics, and local climate risks like flooding.
To boost financial intermediation, the RBZ should consider lowering reserve requirements for banks that prioritise lending to agriculture, manufacturing, and SMEs.
Stability must be anchored in real-sector competitiveness rather than demand suppression, ensuring “inclusive growth” that benefits all citizens.
Notably, though, Treasury is already running a tight fiscal policy that involves reducing Government spending, like on luxury vehicles and foreign travel, and controlling quasi-fiscal activities to curb inflation and maintain ZiG stability.
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