Source: ZiG holds steady as IMF backs reform push – herald
Business Reporter
FOR the first time in decades, Zimbabwean families and the business community are waking up to a reality that once seemed impossible.
They are experiencing a currency that holds its value, prices that no longer spiral out of control, and a sense of economic predictability..
The Reserve Bank of Zimbabwe (RBZ)’s second-quarter snapshot, released last week, confirms what many households have begun to experience — annual ZiG inflation at 4,72 percent, month-on-month inflation averaging 0,47 percent since January and an exchange rate that has remained stable between ZiG25-27 per US dollar.
But beneath the headline numbers lies a deeper story about what this means for the family budget, the pensioner’s savings and the small business owner trying to plan for the future.
Economic analyst, Mr Wafa Kuchera, said: “It is all in the numbers and they are adding up, but more importantly, they are backed by what we can observe and lived experiences.
“As the use of the ZiG inches above 40 percent, there is need to guard against risks, especially to perceptions that are key to keeping inflation anchored.
“There is also a need for some roadmap to preemptively handle concerns from the public and allow markets to start developing the infrastructure needed to support the increasing use of the ZiG.”
Fellow economic analyst, Mr Kuda Mugova, offered a broader historical perspective: “The current stability of the ZiG is a significant achievement, even if it has been supported by less conventional monetary tools such as the Non-Negotiable Certificates of Deposit (NNCDs).
“Confidence in a currency is as much behavioural as it is economic, and for the first time in many years, people are beginning to believe that holding ZiG today will not necessarily leave them worse off tomorrow.”
Mr Mugova said the RBZ was moving in the right direction in rebuilding foreign exchange reserves, although reserve adequacy remained work in progress.
“Perhaps the clearest sign of progress is that, for the first time in many years, budget figures denominated in ZiG are beginning to carry real meaning,” he said.
“The challenge now is to preserve this stability long enough for confidence to become entrenched, while complementing macroeconomic gains with structural reforms that stimulate investment, productivity and employment.”
When the Middle East conflict sent global oil prices soaring in March, many Zimbabweans braced for the worst.
Fuel prices jumped by more than 30 percent.
In the past, such a shock would have triggered a wave of price increases across the economy, wiping out household purchasing power within weeks but this time, something different happened as prices remained stable.
The RBZ attributes the resilience to “better-anchored inflation expectations” — a technical term that translates into a simple reality: people no longer assume prices will skyrocket tomorrow, so they don’t rush to buy goods today, breaking the cycle of panic buying that fuels inflation.
“Based on historical experiences, in the absence of anchored inflation expectations, annual ZiG inflation could have risen significantly from March, potentially approaching 8 percent by May 2026,” reads the RBZ snapshot in part.
For households, the stability translates into something increasingly rare in Zimbabwe’s recent economic history: the ability to plan.
A family can now budget for school fees, groceries and rent with reasonable confidence that prices won’t have doubled by the end of the month.
Pensioners on fixed incomes can stretch their savings further, while business owners can set prices without constantly adjusting for currency collapse.
The ZiG is now used in approximately 40 percent of all national payment system transactions, indicating that Zimbabweans are increasingly willing to use their own currency for everyday purchases.
By the numbers, total ZiG deposits have surged from ZiG4,1 billion in April 2024 to ZiG26,9 billion in June 2026 — a more than six-fold increase that suggests growing confidence in holding local currency.
The ZiG has remained stable as a result of a growing pile of foreign currency reserves, which reached US$1,6 billion by end-June.
This provides import cover of 1,6 months, with authorities targeting 1,7 to 2 months by year-end.
More importantly, the reserves cover approximately six times the stock of ZiG reserve money and almost 1,5 times total ZiG deposits. This means that for every ZiG in circulation, there is substantial backing in foreign currency, gold and other precious minerals.
Gold holdings have reached 4,525 kilogrammes, providing a tangible store of value that underpins confidence in the currency.
Foreign currency receipts reached US$10,72 billion in the first half of 2026 — a 47,8 percent increase from US$7,25 billion in the same period last year.
Export earnings account for 70,3 percent of these receipts, driven by higher tobacco prices and favourable gold, PGM and lithium prices.
Diaspora remittances contribute 14,4 percent, providing a vital lifeline for many families and boosting the current account surplus to about US$570 million in the second quarter.
Yet the picture is not without its shadows.
The IMF, which concluded a mission to Harare from 9-18 June, confirmed that all quantitative targets under the Staff-Monitored Programme had been met.
The Fund projects real GDP growth of about 5 percent for 2026.
The IMF has cautioned that risks remain.
A potential El Niño event could moderate growth to 2-3 percent, hitting agricultural production and rural livelihoods.
Further escalation of the Middle East conflict could push oil prices higher again, testing the resilience of the current stability.
But the central bank has signalled its commitment to “walk the talk” and “stay the course”, while the IMF welcomes plans to further liberalise the foreign exchange market and reform the intervention framework.
For Zimbabwean households, the message is one of cautious optimism.
The currency is stable. Prices are predictable. The foundations are being laid for sustained economic growth.
