IMF pressures Zimbabwe to explain the strategy of abandoning the US Dollar

HARARE, Zimbabwe – October 3 (Running Africa) - In its 2025 Article IV Consultation Report, published on October 2, the IMF noted Zimbabwe's progress in stabilizing the economy. The new local currency, the ZiG, has remained stable since late 2024 following tight monetary policies and the suspension of quasi-fiscal operations by the Reserve Bank of Zimbabwe (RBZ). Overall, the economy is expected to expand by 6 percent this year, supported by strong gold prices, good rainfall, and steady remittances.

Despite these positive developments, the IMF highlighted that Zimbabwe's economy remains highly dollarized. Approximately 17% of transactions were made in ZiG, while the majority of prices and salaries continue to be pegged to US dollars.

The Fund recommended that authorities clarify how the mono-currency transition plan would work in practice, specifically including the handling of existing foreign currency deposits.

It also prompted Harare to tighten monetary and exchange rate policies, ultimately abandoning the US dollar. This move reduced the RBZ's dominance in the foreign exchange market, improved liquidity management, and allowed the exchange rate to respond to market forces.

While commending recent changes, the IMF cautioned that the fiscal burden, low reserves, and policy uncertainty could erode confidence in the ZiG. It stated that the only way to restore trust is to tighten fiscal control, build stronger institutions, and communicate effectively.