The International Monetary Fund said it would like to see the ZiG “fully becoming a national currency,” as it weighs whether to place Zimbabwe on a staff-monitored program.
The ZiG, short for Zimbabwe Gold, succeeded the Zimbabwean dollar in April 2024 after multiple crashes. It’s the country’s sixth attempt since 2009 to replace the dollar as the southern African nation’s main transacting currency, but is yet to succeed.
Several measures will need to be adopted to boost ZiG usage, including deepening the foreign-exchange market to ensure full price discovery, said Wojciech Maliszewski, the Washington-based lender’s mission chief, who is in Zimbabwe to review its request for a new SMP. The nation’s last program ended abruptly in 2019 after the central bank printed money that fueled the collapse of the local currency.
“Right now we see good stability in the official market and we also see a convergence between the parallel and official rate,” he told reporters Monday after meeting Zimbabwean President Emmerson Mnangagwa in the capital, Harare. “Ideally, we would like to see an elimination of this gap, we would like to see one exchange rate.”
Still, the ZiG’s 43% devaluation in September to narrow the gap between the official and unofficial rate and its inconvertibility has led citizens to favor dollars.
The ZiG traded little changed on Tuesday at 26.96 against the dollar and exchanged hands at 32 to 35 on the parallel market.
The Washington-based lender said it isn’t pushing for more exchange rate depreciation but for the “two rates to converge” supported by government fiscal discipline.
“There is a good chance that these rates will converge,” Maliszewski said.
Finance Minister Mthuli Ncube last month at the annual meetings of the African Development Bank said he expected the SMP to be finalized by the end of June. The program would bring Zimbabwe closer toward revamping its $21 billion debt pile with creditors that want assurances that its authorities are pursuing prudent fiscal and monetary policies.
Source: Bloomberg
