IMF seeks clarity on Zimbabwe's plan to ditch US dollar

Published: 35 mins ago

The International Monetary Fund (IMF) has called on Zimbabwe to provide clearer details on its plan to eliminate the use of the United States dollar by 2030, warning that uncertainties surrounding the transition could undermine fragile economic stability.

In its latest review, the Fund highlighted that the Zimbabwe Gold (ZiG) currency, introduced in 2024, has struggled to gain widespread acceptance despite some stability following last year's steep devaluation. Dollarisation remains entrenched in the economy, with most citizens and businesses continuing to rely heavily on the US dollar.

The IMF questioned whether the ZiG would eventually be confined to local transactions or if banks would still be permitted to maintain US dollar deposits under the new monetary framework. "Policy clarity is essential," the review noted, warning that weak confidence in monetary policy continues to constrain efforts to restore stability.

The Fund also cautioned that fiscal pressures pose significant risks to Zimbabwe's fragile stability, urging authorities to engage with international creditors over the country's $21 billion debt burden. Strengthening monetary and exchange-rate policy frameworks was cited as critical to ensuring a credible and sustainable transition.

According to the IMF, the Reserve Bank of Zimbabwe has already requested technical assistance in establishing a functional interbank foreign exchange system. At the same time, local banks have begun restricting US dollar lending ahead of the anticipated shift toward a mono-currency economy.

The IMF stressed that policy credibility and transparent communication will be vital in building public trust in the ZiG. Without such measures, it warned, the government's plan to end reliance on the US dollar risks deepening economic uncertainty.
- BD

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