The International Monetary Fund (IMF) has expressed its desire for Zimbabwe’s gold-backed currency, the ZiG, to evolve into a fully functional national currency, Mining Zimbabwe can report.
By Rudairo Mapuranga
The desire comes as Zimbabwe seeks approval for a new Staff-Monitored Program (SMP), following previous economic reform efforts that were derailed by fiscal slippages and unrestrained monetary expansion.
Introduced in April 2024, the ZiG—short for Zimbabwe Gold—was launched with the ambitious goal of restoring confidence in the local currency after repeated failures of previous regimes.
It is Zimbabwe’s sixth attempt since 2009 to move away from US dollar dependency. Backed by gold and foreign currency reserves, the ZiG replaced the Zimbabwean dollar (ZWL), which had suffered chronic depreciation and triggered hyperinflation. Yet, less than six months into its rollout, the ZiG faces scepticism from both markets and the public.
According to IMF mission chief Wojciech Maliszewski, who is in Zimbabwe to review the country’s SMP request, full adoption of the ZiG will require key structural reforms. “We’d like to see the ZiG fully becoming a national currency,” he said, emphasising the need to deepen the foreign exchange market and eliminate the persistent gap between the official and parallel market rates.
Although the official rate has remained relatively stable at around ZiG 26.95 per US dollar, the currency trades at ZiG 32 to 35 on the informal market, reflecting limited public confidence. A 43% devaluation in September, intended to bring the official rate closer to market realities, further dented the currency’s credibility and accelerated dollarisation in the retail and informal sectors.
The IMF insists that it is not advocating for further devaluation, but rather for convergence between the official and unofficial rates. “We’re not pushing for depreciation,” Maliszewski said. “What we want is a market-driven rate supported by strong fiscal discipline. There’s a good chance the two rates will converge if the government stays the course.”
However, achieving that convergence remains an uphill task.
Public Scepticism and Structural Flaws
As previously reported, many Zimbabweans view the ZiG as merely another unstable local currency masked by gold-backing rhetoric. “You can say it’s backed by gold, but if you can’t convert it into gold or something stable, people won’t trust it,” a Harare-based trader said. The ZiG is not fully convertible, which means holders cannot exchange it for its gold equivalent, limiting its appeal.
The situation is exacerbated by government overspending and policy inconsistency—issues that have undermined all previous monetary reforms. According to The Conversation, the root problem lies in Zimbabwe’s fiscal indiscipline—large public deficits often financed by central bank money printing. Unless the government reins in its spending and restores trust in institutions, no currency—ZiG included—will retain value in the long term.
Economist Gift Mugano argues that the ZiG’s current trajectory mirrors that of its predecessors. “As long as government spending outpaces revenue and monetary policy lacks credibility, the market will continue to dollarize,” he said. The Conversation notes that the real test for the ZiG lies not in the strength of its gold reserves, but in the strength of public trust.
What’s Next for ZiG?
The IMF’s engagement through a staff-monitored program could provide a pathway to macroeconomic stabilisation—if Zimbabwe adheres to strict reforms. This includes improving transparency in public finance, allowing true market forces to set exchange rates, and ending reliance on ad hoc monetary interventions.
Yet, for ordinary Zimbabweans, hope remains thin. Daily transactions continue to favour the US dollar, from groceries to school fees, while the ZiG is increasingly treated as a placeholder rather than a store of value.
With inflation still a threat and confidence in the financial system fragile, the ZiG faces an uncertain future. As analysts caution, no currency can succeed without trust, and trust is something Zimbabwe must now earn, not decree.
