Published: 3 hours ago

The Confederation of Zimbabwe Industries (CZI) has cautioned that while the Reserve Bank of Zimbabwe's (RBZ) restrictive Monetary Policy Statement (MPS) has succeeded in stabilising prices and supporting the Zimbabwe Gold (ZiG) currency, it has also sharply reduced consumer demand, threatening business output and growth.

The RBZ has kept a firm stance to protect the ZiG and anchor inflation, with corrective measures that include a high policy rate of 35%, statutory reserve requirements of 15% for savings and time deposits, and 30% for demand and call deposits. These steps, the central bank argues, are necessary to ensure exchange rate stability and restore confidence in the ZiG, which was introduced to bring long-term economic stability.

In its latest inflation tracker, CZI acknowledged that inflation had eased, showing the policy's effectiveness. However, the grouping stressed that the benefits come at a cost.

"While tight liquidity is helping stabilise prices, it also has negative implications on demand and hence business output and growth. Therefore, in the long term, monetary policy has to ease tight liquidity conditions as stability becomes sustainable," CZI said.

The business body noted that companies are slowly encouraging customers to use ZiG for payments, helping them meet some of their monthly obligations in the local currency. Still, many businesses continue to rely heavily on US dollars to trade with customers, given lingering confidence issues with the ZiG.

CZI also pointed to persistent inflationary pressures. Zimbabwe's annual inflation rate stood at 93.8%, still reflecting the September 2024 devaluation of the ZiG. The grouping expects inflationary pressures to ease from October 2025 if no new shocks emerge. In contrast, US dollar prices remained stable between July and August after the repeal of S.I. 81A of 2024 earlier this year.

The industry lobby further warned that distortions between the official and parallel exchange rates remain a major risk, as the widening gap could push businesses to abandon the formal market altogether.
- NewZimbabwe

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