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IMF says Zimbabwe highly dollarised
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The International Monetary Fund (IMF) says Zimbabwe's economy remains highly dollarised, with any de-dollarisation policies needing gradual implementation while the Confederation of Zimbabwe Industries has called for further disinflation strategies into 2026 to correct pricing and manage stubbornly high inflation.
Zimbabwe is pushing for an end to the use of US Dollars across the economy by 2030, coinciding with a possible two year extension of President Emmerson Mnangagwa's rule originally scheduled to end in 2028. Mnangagwa's party, Zanu PF party has resolved to extend the Zimbabwean leader's tenure and to end dollarisation by 2030.
However, the IMF has said in an interview that "Zimbabwe remains highly dollarized" with any confidence in a local currency needing to "be built through credible fiscal and monetary policies, a strengthened FX market, and the absence of quasi-fiscal operations such as providing subsidies or financing government programs" outside of the budget framework.
The Zimbabwe Gold (ZiG) local currency Zimbabwe says is backed by foreign currency reserves is largely shunned by locals for transactions. The IMF said Zimbabwe has to ringfence any de-dollarisation efforts by a stable policy environment that will accrue confidence for the local unit of exchange.
"Confidence in macro-economic policy and the currency is reinforced by a predictable, rules-based policy environment and progress on economic governance. Advancing these reforms-alongside clear, consistent economic policy implementation-would help anchor expectations and bolster confidence," the IMF's chief of mission to Zimbabwe, Wojciech Stanislaw Maliszewski, said by email.
The Confederation of Zimbabwe Industries (CZI) has called for further disinflation strategies over the next few months. It argued that inflation should be lowered further.
"An inflation rate of 30% is still too high, calling for more disinflation strategies into 2026. The policy target is to have an annual ZiG inflation of 30% by December 2025," said Cornelius Dube, chief economist for the CZI.
According to the IMF, the Reserve Bank of Zimbabwe (RBZ) has been tightening its policy stance since September last year after halting monetary financing. This had helped to lower inflation from elevated highs while also easing exchange-rate pressures.
"The gap between official and parallel market rates narrowed, and ZiG inflation declined by mid-2025, though the economy remains highly dollarized," said Maliszewski.
For the month of October, Zimbabwe's inflation in ZiG local currency dropped to 32.7% after shedding 50 percentage points from a rate of 82.7% in the month of September 2025. on the other hand, the USD month-on-month inflation for October 2025 increased to 0.3% from a rate of 0% in the month of September 2025.11.4
The CZI has explained that this means that prices in USD terms remained stable as the observed increase is minimal.
However, CZI believes that "when the de-dollarisation programme gets rolled out, the inflation differential between ZiG and USD will matter in the decision of which currency to use" in transactions.
"USD price stability would make the USD attractive as both a transaction and savings currency. ZiG stability has to be sustainable for a very long time before it can also be considered a close substitute to the USD," said Dube.
This comes as Zimbabwe's USD year-on-year inflation has continued on a declining trend which started in July 2025.
In October 2025, Zimbabwe's USD inflation declined to 13% from the 13.4% registered in the month of September. However, a 13% USD inflation is still very high, as it means that savings in USD lost about 13% purchasing power between October 2024 and October 2025, said the CZI.
"With the USD being the main savings currency, it is critical for its inflation to remain very low if savings are to be protected."
Zimbabwe is pushing for an end to the use of US Dollars across the economy by 2030, coinciding with a possible two year extension of President Emmerson Mnangagwa's rule originally scheduled to end in 2028. Mnangagwa's party, Zanu PF party has resolved to extend the Zimbabwean leader's tenure and to end dollarisation by 2030.
However, the IMF has said in an interview that "Zimbabwe remains highly dollarized" with any confidence in a local currency needing to "be built through credible fiscal and monetary policies, a strengthened FX market, and the absence of quasi-fiscal operations such as providing subsidies or financing government programs" outside of the budget framework.
The Zimbabwe Gold (ZiG) local currency Zimbabwe says is backed by foreign currency reserves is largely shunned by locals for transactions. The IMF said Zimbabwe has to ringfence any de-dollarisation efforts by a stable policy environment that will accrue confidence for the local unit of exchange.
"Confidence in macro-economic policy and the currency is reinforced by a predictable, rules-based policy environment and progress on economic governance. Advancing these reforms-alongside clear, consistent economic policy implementation-would help anchor expectations and bolster confidence," the IMF's chief of mission to Zimbabwe, Wojciech Stanislaw Maliszewski, said by email.
The Confederation of Zimbabwe Industries (CZI) has called for further disinflation strategies over the next few months. It argued that inflation should be lowered further.
"An inflation rate of 30% is still too high, calling for more disinflation strategies into 2026. The policy target is to have an annual ZiG inflation of 30% by December 2025," said Cornelius Dube, chief economist for the CZI.
According to the IMF, the Reserve Bank of Zimbabwe (RBZ) has been tightening its policy stance since September last year after halting monetary financing. This had helped to lower inflation from elevated highs while also easing exchange-rate pressures.
"The gap between official and parallel market rates narrowed, and ZiG inflation declined by mid-2025, though the economy remains highly dollarized," said Maliszewski.
For the month of October, Zimbabwe's inflation in ZiG local currency dropped to 32.7% after shedding 50 percentage points from a rate of 82.7% in the month of September 2025. on the other hand, the USD month-on-month inflation for October 2025 increased to 0.3% from a rate of 0% in the month of September 2025.11.4
The CZI has explained that this means that prices in USD terms remained stable as the observed increase is minimal.
However, CZI believes that "when the de-dollarisation programme gets rolled out, the inflation differential between ZiG and USD will matter in the decision of which currency to use" in transactions.
"USD price stability would make the USD attractive as both a transaction and savings currency. ZiG stability has to be sustainable for a very long time before it can also be considered a close substitute to the USD," said Dube.
This comes as Zimbabwe's USD year-on-year inflation has continued on a declining trend which started in July 2025.
In October 2025, Zimbabwe's USD inflation declined to 13% from the 13.4% registered in the month of September. However, a 13% USD inflation is still very high, as it means that savings in USD lost about 13% purchasing power between October 2024 and October 2025, said the CZI.
"With the USD being the main savings currency, it is critical for its inflation to remain very low if savings are to be protected."
Source - IOL
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