The International Monetary Fund (IMF) has called on Zimbabwe to provide more details about how it intends to phase out the U.S. dollar by 2030 and rely fully on its new local currency, the ZiG.
The Washington-based lender warned that the ZiG has not yet gained broad public trust or wide use in the economy.
IMF has questions over ZiG’s role
In its latest review of Zimbabwe’s economy, the IMF noted that key questions remain unanswered.
It is still unanswered whether the ZiG will only be used for domestic transactions while allowing bank accounts to continue holding U.S. dollar balances.
“The role of the ZiG in the economy is still limited and monetary policy credibility remains low, as indicated by high dollarisation and the elevated parallel exchange-rate premium,” the IMF said.
A currency with a troubled history
Zimbabwe launched the Zimbabwe Gold (ZiG) in April 2024, its sixth attempt at a functioning local currency since the collapse of the Zimbabwe dollar in 2009. The central bank devalued the new unit in September last year, and tighter monetary policies have since kept it relatively stable.
Dollar exit sparks debate
Even so, the debate over abandoning the U.S. dollar remains a flashpoint.
Banks have already begun restricting dollar lending to companies and households as a precaution ahead of the planned switch to a mono-currency system.
The IMF also cautioned that fiscal pressures could threaten Zimbabwe’s fragile economic stability. According to Bloomberg, the country owes about US$21 billion to creditors.
It remains in debt distress, with large arrears to multilateral and bilateral lenders.
The Fund urged Zimbabwe to strengthen its monetary and exchange-rate framework.
Other key highlights from the IMF report include:
- The need for reforms to the monetary and exchange-rate policy framework.
- Tighter monetary policy has helped stabilize the ZiG since its devaluation in September 2024.
- The central bank has requested IMF technical support to establish an interbank foreign-exchange trading system.
