Africa-Press – Zimbabwe. THE Reserve Bank of Zimbabwe (RBZ) says reserves backing the Zimbabwe Gold (ZiG) currency have grown by nearly 9% to US$980 million, as it moves to create the required buffer for a monocurrency regime.
Reserves were US$900 million as of September this year.
About ZiG18 billion is circulating in the formal economy.
According to the RBZ, once the foreign currency reserves reach about US$6 billion, the central bank will be able to transition to a monocurrency regime and meet the government deadline by 2030.
Speaking at the annual Banks and Banking Survey and Awards 2025, run by the Zimbabwe Independent, RBZ’s director of Economic Research, Modelling & Policy, Nebson Mupunga, said they were working on cohesion between monetary and fiscal authorities.
“There’s a need for continued fiscal and monetary policy cohesion with limited monetisation or fiscal deficits. I think you know the minister has been saying that there’s no appetite to come to the Reserve Bank to accommodate them,” he said at the awards ceremony held last week.
“We hope to maintain that cohesion, then we will be able to gradually transition to monocurrency, not in a forced manner, but in a market-friendly manner. That is what we are aiming to do going forward.”
He said the RBZ was on a “positive trajectory” in terms of meeting some of those conditions necessary for a monocurrency regime, as dictated in Statutory Instrument 218 of 2023.
“In terms of foreign reserves, currently we are now at around US$980 million, almost closer to a US$1 billion, and we hope to end the year with over US$1 billion in terms of reserves, which will be equivalent to around 1,2 months of import cover,” Mupunga said.
“And we expect to gradually increase the reserves until we reach six months of import cover, which will be closer to around US$6 billion, before we transition to monocurrency. And as I have already indicated, the reserves are covered more than four times.
“And most countries that cover the reserves with foreign currency, they only earn 400% coverage. But for us, we have done it almost four times. That is to give us a comfortable cover of reserve money and also to boost our confidence in the economy.”
He added that RBZ was working towards ensuring that the foreign exchange is working efficiently and smoothly.
“Then we also need stable exchange rate dynamics. Why some people always prefer other currencies to others is because of the exchange rate,” Mupunga said.
“But if the exchange rate is stable and there is limited over- or undervaluation, it means economic agents will be indifferent between holding US dollars and local currency because the exchange rate is stable and there is no potential loss from under- or overvaluation of the exchange rate.”
He said it was one of the conditions precedent for the transition to monocurrency.
“Then there’s also a need for increased demand for local currency, which means as we are gradually transitioning to full adoption of ZiG as the sole currency for transactions domestically, we need to gradually increase the demand for ZiG,” Mupunga said.
However, economists argued that this increase in demand would be unattainable, as the informal sector did not use the ZiG.
“They do not know it is on the ground, but you are talking about a 15% national average (ZiG circulation). So, you are data-driven, but you must also include the informal sector. That is the proper dataset of ZiG’s use,” economist Gift Mugano said.
He said the 15% circulation is in the formal sector, yet officially this only makes up 23,9% of the economy against 76,1% of the informal sector.
“The Reserve Bank has a tight monetary policy; they are reining in ZiG in circulation. In terms of money supply, it is below 2% when you look at the entire economy, not the formal sector, because that is not where the economy is,” Mugano said.
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