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ZiG monthly inflation seen staying below 3%
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Zimbabwe's gold-backed currency (ZiG) is expected to maintain stable inflation levels, with average month-on-month inflation forecast to remain below 3% in 2025. This projection is underpinned by stringent fiscal and monetary policies aimed at preserving macroeconomic stability, Finance, Economic Development, and Investment Promotion Minister Professor Mthuli Ncube announced during the 2025 National Budget Statement presentation yesterday.
The 2025 fiscal plan is built on a foundation of single-digit inflation and a stable exchange rate, providing a conducive environment for business.
"Any deviation from these assumptions, including the widening of the premium between official and parallel markets, will severely impact macroeconomic stability," Prof. Ncube warned.
Stability Following ZiG Introduction
Since the introduction of ZiG in April 2024, price stability has improved, with month-on-month ZiG inflation showing a notable decline of -2.4% in May 2024 and averaging 0% in the second quarter.
However, inflationary pressures resurfaced between August and October 2024, driven by heightened parallel market foreign exchange activities. In response, the Monetary Policy Committee (MPC) introduced stabilisation measures such as raising the bank policy rate, standardising statutory reserve requirements, and limiting foreign exchange outflows.
These measures contributed to stabilising both the official and parallel market exchange rates, with the local currency now trading at US$1:ZiG25. The foreign exchange withdrawal limit for individuals was also reduced from US$10,000 to US$2,000.
Policy Measures for Stability
Prof. Ncube emphasized that monetary authorities will continue to use the willing-buyer, willing-seller exchange rate mechanism to ensure price stability. In addition, the Government and the Reserve Bank of Zimbabwe (RBZ) will closely monitor liquidity conditions through the Liquidity Management Committee to prevent market imbalances.
"Fiscal and monetary authorities will work together to ensure the stability and broader acceptance of ZiG in the economy," he said.
Fiscal Discipline and Debt Restructuring
On the fiscal front, Prof. Ncube highlighted the Government's commitment to aligning expenditure with available resources while prioritizing development and social spending. A comprehensive debt restructuring plan is being renegotiated with creditors to complement domestic resource mobilization, including asset sales, to restore fiscal sustainability.
"During the last quarter of the year, social protection programs will be prioritized, but spending will be carefully managed to avoid destabilizing the economy," he added.
Vision 2030 Alignment
The 2025 National Budget aligns with Zimbabwe's long-term development goals under Vision 2030 and the Sustainable Development Goals (SDGs). The Government aims to ensure macroeconomic stability remains the cornerstone of its strategy to drive economic growth and improve livelihoods.
Prof. Ncube reiterated that ongoing measures would anchor price stability and support economic development in the coming year, setting the stage for sustained recovery and growth.
The 2025 fiscal plan is built on a foundation of single-digit inflation and a stable exchange rate, providing a conducive environment for business.
"Any deviation from these assumptions, including the widening of the premium between official and parallel markets, will severely impact macroeconomic stability," Prof. Ncube warned.
Stability Following ZiG Introduction
Since the introduction of ZiG in April 2024, price stability has improved, with month-on-month ZiG inflation showing a notable decline of -2.4% in May 2024 and averaging 0% in the second quarter.
However, inflationary pressures resurfaced between August and October 2024, driven by heightened parallel market foreign exchange activities. In response, the Monetary Policy Committee (MPC) introduced stabilisation measures such as raising the bank policy rate, standardising statutory reserve requirements, and limiting foreign exchange outflows.
These measures contributed to stabilising both the official and parallel market exchange rates, with the local currency now trading at US$1:ZiG25. The foreign exchange withdrawal limit for individuals was also reduced from US$10,000 to US$2,000.
Policy Measures for Stability
Prof. Ncube emphasized that monetary authorities will continue to use the willing-buyer, willing-seller exchange rate mechanism to ensure price stability. In addition, the Government and the Reserve Bank of Zimbabwe (RBZ) will closely monitor liquidity conditions through the Liquidity Management Committee to prevent market imbalances.
"Fiscal and monetary authorities will work together to ensure the stability and broader acceptance of ZiG in the economy," he said.
Fiscal Discipline and Debt Restructuring
On the fiscal front, Prof. Ncube highlighted the Government's commitment to aligning expenditure with available resources while prioritizing development and social spending. A comprehensive debt restructuring plan is being renegotiated with creditors to complement domestic resource mobilization, including asset sales, to restore fiscal sustainability.
"During the last quarter of the year, social protection programs will be prioritized, but spending will be carefully managed to avoid destabilizing the economy," he added.
Vision 2030 Alignment
The 2025 National Budget aligns with Zimbabwe's long-term development goals under Vision 2030 and the Sustainable Development Goals (SDGs). The Government aims to ensure macroeconomic stability remains the cornerstone of its strategy to drive economic growth and improve livelihoods.
Prof. Ncube reiterated that ongoing measures would anchor price stability and support economic development in the coming year, setting the stage for sustained recovery and growth.
Source - The Herald
