Business Reporter
The Reserve Bank of Zimbabwe (RBZ) has robustly defended its current monetary policy and the framework governing the newly introduced Zimbabwe Gold (ZiG) currency, expressing disagreement with certain key recommendations from the International Monetary Fund (IMF).
In a press release this week, the IMF provided a summary of the findings from its August 2025 Executive Board meeting, following a review of the staff report on Zimbabwe’s economic performance. The report, which concluded the IMF’s Article IV consultation with Zimbabwe, acknowledged the recent effectiveness of the country’s “tight monetary policy” in stabilizing the ZiG and curbing inflation.
However, the RBZ has expressed reservations about IMF suggestions to overhaul its foreign exchange (FX) management system, particularly with regard to the mandatory export surrender requirements, which currently stand at 30%.
While the IMF recognized the central bank’s recent success in stabilizing the currency, it called for a move toward a more transparent, market-driven foreign exchange system. Specifically, the IMF recommended reducing the RBZ’s involvement in the FX market and shifting the surrender requirements through authorized dealers to improve exchange rate determination.
The RBZ, however, has pushed back against this proposal and reaffirmed commitment to price stability and ongoing policy reforms, particularly in the areas of communication and policy clarity.
The RBZ has acknowledged the positive impact of its policies in reducing inflation and stabilizing the ZiG, but it has emphasized that the current system provides the flexibility needed to intervene in the market when necessary to stabilize the currency and strengthen international reserves.
The IMF’s staff report also raised concerns about Zimbabwe’s hybrid monetary anchor, which ties the ZiG to a basket of reserves. According to the IMF, this could create confusion about the nominal anchor of the currency, as such an approach is typically associated with a fixed parity. The IMF also expressed concern that the Zimbabwean dollar’s exchange rate under the willing buyer-willing seller (WBWS) system does not fluctuate as expected in response to market forces, challenging its consistency with a floating exchange rate arrangement.
While the IMF emphasized the importance of reducing the RBZ’s role in the FX market, it also noted that achieving the target of 30% inflation by the end of 2025 would require a growth rate of around 50%. In response, the RBZ insisted that the WBWS rate is entirely market-determined and questioned the IMF’s characterization of its involvement in setting the exchange rate. The central bank argued that curbing its participation in the market would hinder its ability to stabilize the exchange rate and build its international reserve buffer.
Despite this disagreement, the RBZ has indicated openness to adjusting its approach in the future. It has proposed that any incremental changes to the surrender requirements beyond the current 30% could be directed to the market, provided that a more transparent interbank trading platform is in place. The RBZ also expressed interest in receiving IMF technical assistance to help establish such a system.
On the broader monetary policy front, the IMF urged the RBZ to rethink its liquidity management strategy, particularly with regard to the use of Non-Negotiable Certificates of Deposit (NNCDs), arguing that they do not support effective monetary policy transmission. The IMF has recommended phasing out NNCDs in favor of tradable securities with market-based interest rates. It also suggested relaxing daily reserve requirements to allow for greater liquidity smoothing.
The RBZ responded by outlining its medium-term plans to reduce reliance on direct monetary tools. This includes the introduction of multiple tenors for NNCDs, remunerating them, and eventually introducing a Term Deposit Facility to use interest rates as a more effective tool of monetary policy. The RBZ also noted that the upcoming National Development Strategy 2 (NDS2) would provide further clarity on the integration of the Zimbabwean dollar (ZiG) and the US dollar in the country’s banking system, particularly in light of the planned transition to a mono-currency system by 2030.
Finally, the RBZ rejected the IMF’s assessment of exchange rate restrictions, describing many of the measures as “desirable macroprudential policies.” It argued that recent unified FX guidelines have removed all formal restrictions and that any continuation of prior measures is due to internal procedures within financial institutions, not government mandates. The central bank also reiterated its commitment to improving financial sector oversight, including the implementation of the Basel III capital framework.
In summary, while the IMF has acknowledged Zimbabwe’s progress in stabilizing its currency, the RBZ remains steadfast in defending its current approach to monetary policy, exchange rate management, and the use of the Zimbabwe Gold.
