Zimbabwe closes in on forex reserve benchmark

Zimbabwe has increased its foreign currency import cover to 1,5 months for the first time in 21 months, marking a key milestone in the country's ongoing economic stabilisation efforts since the introduction of the Zimbabwe Gold (ZiG) currency in April 2024.

The development was confirmed by Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mushayavanhu in the central bank's quarterly economic and monetary policy snapshot for the period ending December 31, 2025.

Dr Mushayavanhu said foreign currency reserves had climbed to about US$1,2 billion, supported by strong export earnings, firm global commodity prices and rising diaspora remittances.

Analysts say the improvement places Zimbabwe firmly on track to attain the internationally recommended three months' import cover, a critical macroeconomic buffer, sooner than initially projected—particularly against the backdrop of record gold prices and rising mineral production.

"Foreign currency receipts averaged US$1,3 billion per month in 2025, against average external payment obligations of US$951,31 million, leaving a sizeable surplus," Dr Mushayavanhu said.

The surplus averaged around US$400 million over the year, helping to support domestic transactions and build reserves. Zimbabwe is also expected to post a current account surplus exceeding US$1 billion in 2025, up sharply from US$501 million recorded in the previous year.

Economist Malone Gwadu said the rise in import cover reflects a deliberate "back-to-basics" strategy focused on rebuilding reserves and restoring confidence in the monetary system.

"It is quite assuring that the back-to-basics approach is now clearly on the horizon, with foreign currency reserves being attained and import cover gradually built," Gwadu said.

"With gold prices firming up, so too will our import cover, as reserves are largely supported by gold. This also strengthens the defensive capabilities of the ZiG, which is gold-backed."

Global gold prices surged to historic highs, reaching US$4 600 per ounce for the first time in 2026, while Zimbabwe surpassed the 45-tonne gold production mark in 2025. The RBZ expects the momentum to continue this year, alongside strong platinum group metals prices.

Gwadu said reaching the three-month import cover threshold would be critical for currency stability and competitiveness.

"The move towards three months' import cover is a crucial threshold for a currency to hold the fort and gradually become internationally competitive," he said.

Based on current inflows and commodity price trends, analysts estimate Zimbabwe could reach the three-month benchmark within 12 to 18 months, faster than earlier projections made when ZiG was launched.

RBZ data shows Zimbabwe's foreign currency generation capacity grew by 21,8% to US$16,2 billion in 2025, from US$13,3 billion in 2024. Export earnings dominated inflows, accounting for 59,7%, followed by loan proceeds (14,8%) and diaspora remittances (13,5%).

Banker Raymond Madziva said the steady rise in remittance inflows is increasingly strengthening the country's external position.

"Diaspora remittances are no longer just supporting household consumption; they are now a meaningful pillar of foreign currency receipts," Madziva said.

"The consistency of these flows improves liquidity in the formal market, reduces pressure on the exchange rate, and supports the broader reserve accumulation process."

Economist Tinevimbo Shava said progress toward the three-month import cover benchmark has far-reaching implications for macroeconomic stability.

"Internationally, three months' import cover is considered the minimum safety buffer for any economy," Shava said.

"It ensures a country can continue importing essential goods such as fuel, medicines, electricity and industrial inputs even when external shocks occur."

He added that stronger reserves enhance policy credibility by supporting exchange rate stability, lowering inflationary pressures, improving investor confidence and reducing reliance on short-term borrowing.

The RBZ noted that merchandise trade remained largely in surplus during the second half of 2025, while improved prices for key export minerals and continued growth in remittances are expected to further boost foreign currency inflows in 2026.

With global gold prices elevated and production trends favourable, economists say Zimbabwe's path toward the three-month import cover benchmark is increasingly within reach—potentially marking a turning point in the country's long-standing efforts to achieve macroeconomic stability.