Zimbabwe not going back on dumping US dollar

Zimbabwe has entered the third and final stage of its de-dollarisation roadmap, a decisive phase aimed at entrenching currency stability and laying the foundation for a sustainable mono-currency by 2030.

Speaking at the close of the Zimbabwe Economic Development Conference (Zedcon) in Bulawayo on Friday, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, said the country had made major progress since the launch of the de-dollarisation strategy nearly four years ago.

Central to the process has been the introduction of the Zimbabwe Gold (ZiG) currency, which has anchored economic stability for the past year.

"You cannot de-dollarise if you do not have a domestic currency," said Prof Ncube.

"The first step was to reintroduce a local currency, the Zimbabwe dollar. We struggled to stabilise it because certain fundamentals were not yet in place. We then tackled the key sources of instability, such as quasi-fiscal activities at the Reserve Bank and excessive liquidity growth. Eventually, we replaced the Zimbabwe dollar with the ZiG, at a time when fiscal and monetary discipline had been restored."

With stability now holding for a year, Zimbabwe has moved into the third stage of its roadmap - strengthening confidence and laying long-term foundations for a stand-alone local currency.

The country is currently operating under a multicurrency framework, dominated by the US dollar and the ZiG, which is legally set to run until 2030. Authorities expect that by then, strong economic fundamentals will support the transition to a fully fledged domestic currency.

Zimbabwe adopted dollarisation in 2009 after hyperinflation decimated the local dollar. While the US dollar stabilised prices, it has also posed competitiveness challenges for local producers and reduced policy flexibility.

Prof Ncube stressed that the long-term objective is for Zimbabwe to regain full control of its monetary policy.
"Zimbabwe needs a domestic mono-currency, like the ZiG, to manage inflation effectively and enable long-term economic planning," he said.

Permanent Secretary for Finance and Economic Development, Mr George Guvamatanga, added that the roadmap, finalised in 2019, is a key pillar of Vision 2030, which seeks to transform Zimbabwe into an upper-middle-income economy.

"The ZiG itself is part of that roadmap," he noted. "From Government's perspective, we are already implementing it, and we are on course towards full de-dollarisation."

Authorities remain confident that under the National Development Strategy 2 (NDS2), the roadmap will deliver a resilient currency anchored on productivity, fiscal discipline, and low inflation.