No Turning Back: Zimbabwe Commits to ZiG Over US Dollar

Zimbabwe has entered the third and final phase of its de-dollarisation roadmap, aimed at establishing a stable mono-currency system by 2030.

Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, confirmed the development last Friday during a media briefing at the Zimbabwe Economic Development Conference (ZEDCON) held in Bulawayo.

Prof Ncube said the country had made significant progress since launching the roadmap nearly four years ago, culminating in the introduction of Zimbabwe Gold (ZiG), which has anchored monetary stability over the past year.

“You cannot de-dollarise if you do not have a domestic currency. So the first step in our de-dollarisation roadmap was to introduce a domestic currency, the Zimbabwe dollar, and then we struggled to stabilise it because certain fundamentals were not in place,” he explained.

He said authorities moved swiftly to address key sources of instability, including quasi-fiscal activities at the Reserve Bank of Zimbabwe (RBZ) and excessive liquidity growth.

“We had the Treasury absorb some of the foreign loans that were sitting at the central bank. These are so-called quasi-fiscal activities.

“We also closed any borrowings from the Reserve Bank window to make sure there is no excess growth in liquidity,” he stated.

Despite these interventions, the Zimbabwe dollar remained volatile, prompting the introduction of the ZiG last year.

Prof Ncube said the new currency was launched after fiscal and monetary discipline had been restored.

“We ended up replacing it with the ZiG. By the time we introduced the ZiG, everything was in place. I would like to say right now, we are really on phase three.

“Phase three being, how do you engender stability further because we have been stable now for a year,” he added.

Zimbabwe currently operates under a multicurrency regime dominated by the US dollar and ZiG, which is legally supported until 2030.

Authorities expect that by then, strong economic fundamentals will allow the country to transition to a sustainable mono-currency system.

The US dollar was officially adopted in 2009 after hyperinflation rendered the local currency worthless.

While the US dollar has helped curb inflation, it has also created competitiveness challenges for local producers and limited policy flexibility.

Officials believe the de-dollarisation roadmap, aligned with the National Development Strategy 2 (NDS2), will deliver a resilient local currency backed by productivity, low inflation, and fiscal prudence.

“Zimbabwe needs a domestic mono-currency, like the ZiG, to regain control over its monetary policy, manage inflation and foster long-term economic planning,” he emphasized.

Permanent Secretary in the Ministry of Finance, Mr George Guvamatanga, said the roadmap was finalised in 2019 and is already being implemented.

“We do have a very comprehensive de-dollarisation roadmap. As we speak, the ZiG which we are currently using was created as part of that roadmap.

“From the Government perspective, we are already implementing it. We are on course towards achieving de-dollarisation,” he noted.

Mr Guvamatanga added that feedback from ZEDCON delegates would be reviewed and incorporated into the roadmap.

SundayNews