IMF urges Zimbabwe to ban US dollar

The International Monetary Fund (IMF) has expressed full support for Zimbabwe’s gold-backed ZiG currency to become the country’s sole legal tender.

This is in line with reforms under consideration for a potential staff-monitored program (SMP).

The ZiG short for Zimbabwe Gold, was introduced in April 2024 to take the place of the collapsing Zimbabwean dollar.

It is the sixth currency reform since 2009.

Meanwhile, IMF mission chief Wojciech Maliszewski emphasized the need to deepen the foreign exchange market and achieve full price discovery to support ZiG adoption.

Key Highlights:
?IMF wants full national adoption of ZiG.
?Push for convergence of official and parallel exchange rates (currently 26.95 vs. 32–35 per USD).
?No push for further depreciation, but focus on fiscal discipline and market confidence.
?Zimbabwe’s previous SMP failed in 2019 due to excessive money printing.

Despite efforts, ZiG’s limited convertibility and past devaluation (43% in September) have led citizens to continue favoring the US dollar. However, the IMF noted encouraging signs of market stability and exchange rate alignment.