Business Reporter
The Reserve Bank of Zimbabwe (RBZ) has reaffirmed its commitment to transitioning towards a single currency for domestic transactions, citing the notable economic progress made in 2025 as a solid foundation for long-term stability.
However, the central bank emphasized that this shift will be gradual, with a series of economic milestones guiding the process rather than arbitrary deadlines.
Since its introduction on April 5, 2024, the Zimbabwean Gold-backed Currency (ZiG) has shown impressive resilience. Backed by gold and foreign currency reserves, and supported by fiscal discipline under the Second Republic, the ZiG has successfully curbed inflation and stabilized the exchange rate.
The currency has strengthened by 1.5% against the US dollar since the start of 2025, climbing from ZiG 25.98 to ZiG 25.59 per US dollar.
Dr. John Matshe, Governor of the RBZ, reiterated that the move to a mono-currency system will be based on achieving sustained economic stability, rather than a set date.
He highlighted key criteria for this transition, including low inflation and the accumulation of foreign reserves covering at least 3.6 months of import needs—an objective now in sight as Zimbabwe records a consistent positive trade balance.
A unified exchange rate system, stable currency dynamics, and a recalibrated tax framework mandating local currency payments for public services are central to the RBZ’s strategy. The government and RBZ have also worked together on a “back-to-basics” approach to ensure budgetary discipline and maintain public trust in the financial system.
For the first time in years, Zimbabwe is restricting borrowing to only projects that can generate immediate revenue streams for repayment. Dr. Matshe also noted that new, secure banknotes are expected to be released by the second quarter of 2026, supporting the transition.
“The primary goal is macroeconomic stability to lay the groundwork for mono-currency adoption and to meet the objectives of the National Development Strategy 2—building a prosperous, upper-middle-income society by 2030,” said Dr. Matshe. He emphasized that the transition will be driven by economic conditions, not an arbitrary timeline.
While Zimbabwe’s multi-currency system remains legal until December 31, 2030, uncertainty surrounding the previous 2025 deadline had created issues in the banking sector, particularly with long-term loans in foreign currency. The new, extended deadline is expected to ease this concern.
Looking back, the past year has seen significant progress, with inflation cooling and the ZiG becoming more stable. Annual inflation for the ZiG dropped to 15% by early 2025, well below the initial target of 30%. Month-on-month inflation has remained steady, averaging just 0.4% since February 2025, with single-digit annual inflation now within reach. Dr. Matshe suggested that the January inflation figures, due next week, could fall within the Southern African Development Community (SADC) benchmark range of 3 to 7%.
Foreign currency inflows hit a record US$16.2 billion in 2025, up from US$13.3 billion in 2024, largely driven by soaring gold exports. Zimbabwe’s trade balance remains positive, with a steady exchange rate of approximately ZiG 26 per US dollar and a parallel market premium kept below 20%.
In a significant policy shift, the RBZ reported zero central bank financing of government expenditures in 2025, thanks to improved coordination with the Ministry of Finance. Dr. Matshe praised this collaboration, stating, “We appreciate the Ministry of Finance for enabling us to limit central bank financing, which is crucial for fiscal discipline.”
Zimbabwe’s foreign currency reserves reached US$1.2 billion by December 2025, enough to cover 1.5 months of imports. These reserves now exceed the local money stock by six times and are double the total value of all ZiG deposits in the banking system.
Looking ahead, Zimbabwe is projected to record a strong current account surplus of around US$1 billion for 2025, more than double the previous year’s surplus. While 2026 growth is expected to be modest at 5%, Dr. Matshe hinted that it could surpass projections, following a robust 6.6% growth in 2025. The overarching trend remains positive, with the RBZ continuing its focus on maintaining low, stable inflation and controlling money supply growth, which has averaged just 2% in 2025.
Despite challenges, Dr. Matshe remains optimistic about Zimbabwe’s economic trajectory, with the successful implementation of the ZiG and key economic reforms paving the way for a stronger, more stable future.
