Zimbabwe’s bold transition to its new gold-backed currency, the ZiG, has drawn the attention of the International Monetary Fund (IMF). In its latest Article IV consultation, the IMF urged Harare to clarify its de-dollarization roadmap, warning that uncertainty about monetary policy direction and currency convertibility could undermine market confidence.
The IMF’s warning comes at a critical moment for Zimbabwe. After decades of monetary instability and recurrent hyperinflation episodes, the government introduced the Zimbabwe Gold (ZiG) in early 2024, pegged to the country’s gold reserves and a basket of foreign currencies. Authorities have since set 2030 as the target year to fully replace the U.S. dollar, which currently dominates more than 70% of domestic transactions.
According to the IMF, Zimbabwe’s success depends on how effectively the country communicates and implements its monetary reform strategy. The fund highlighted persistent ambiguities — including whether dollar deposits will remain convertible, how exchange rate mechanisms will evolve, and what the transition timeline truly entails.
These issues have heightened uncertainty among investors and businesses. Despite the relative stability of the ZiG since its introduction, analysts note that confidence remains fragile without clear and consistent policy. “De-dollarization must be carefully sequenced, anchored in credible fiscal and monetary frameworks,” the IMF warned.
The IMF also advised the government to avoid premature restrictions on foreign currency usage, recommending that authorities first build confidence through macroeconomic stability, transparency, and adequate reserves. This includes enhancing the independence of the Reserve Bank of Zimbabwe (RBZ) and strengthening fiscal discipline to avoid deficit monetization — a major trigger of past crises.
Government Response and Market Implications
The RBZ states that the ZiG is on track to restore monetary sovereignty and defends its restrictive monetary policy as essential to contain economic imbalance. Inflation has dropped drastically from over 175% in early 2024 to below 20% by mid-2025, driven by a stable exchange rate and improved gold reserves.
Financial authorities also reaffirmed their commitment to a phased transition, with the use of the U.S. dollar persisting in the medium term. “The ZiG is the anchor of our monetary stability. The process will take time, but confidence is returning,” said a senior Treasury official.
However, business groups continue to express concern over liquidity restrictions, dual pricing, and limited access to foreign exchange, factors that could hinder economic recovery if not addressed.
Investor Confidence and the Way Forward
For Zimbabwe, regaining investor confidence remains the ultimate test. Clear policy guidance could help attract much-needed foreign capital, especially in the mining, manufacturing, and infrastructure sectors. The IMF emphasized that predictable rules, transparent data, and strengthened central bank governance are essential to rebuild credibility with creditors and international markets.
The success of Zimbabwe’s monetary transition will depend not only on macroeconomic management but also on political will — ensuring that reforms are shielded from short-term pressures and special interests. If effectively executed, the ZiG could symbolize a new era of monetary resilience. If mismanaged, there is a risk of repeating the cyclical volatility pattern that has long plagued the country’s economy.
As the ZiG experience unfolds, all eyes remain on Harare — and on whether the country can finally strike a balance between ambition and stability.
Source: Further Africa
