The Reserve Bank of Zimbabwe (RBZ) Governor Dr. John Mushayavanhu yesterday announced the 2025 Monetary Policy Statement underpinned by the Bank’s “Back- to- Basics” Strategic thrust.

HIGHLIGHTS: In new policy measures, RBZ takes more forex from exporters, ended some currency restrictions, and offers little else to lift economy.

The Reserve Bank is taking more forex from exporters and lifting some currency restrictions under new measures announced by Governor John Mushayavanhu.

Exporters will now be paid 70% of their earnings in US dollars, with the rest in ZiG.

This is down from 75%, a level that exporters – such as mines and agriculture exporters – had already said was making their businesses less profitable and hurting investment.

In their position paper to government late last year, miners had proposed that they be allowed to keep 85% of their earnings, saying getting just 25% in ZiG was “a direct cost and is akin to a tax on exporters’ gross proceeds”.

However, in his bid to raise more US dollars and support the ZiG, Mushayavanhu has done the opposite of what exporters were hoping for, increasing the share of forex that RBZ gets from exports.

“In order to guarantee continued stability in the interbank foreign exchange market through augmenting the supply of foreign currency, as well as building the critical foreign currency reserves needed to anchor the ZiG, the foreign currency retention level for exporters has been reduced from 75% to 70%, with immediate effect,” Mushayavanhu said in his monetary policy statement on Thursday.

He says this “this review is consistent with the increased use of ZiG in the economy. The additional 5% will ensure that exporters mobilise sufficient ZiG to meet local currency obligations and other expenses, including tax payments, going forward”.

Mushayavanhu says he has a plan for exporters who fear losing value. If they have extra ZiG, they can deposit it in a special RBZ fund, from which they can withdraw at the official rate when they need it.

He says: “In order to ensure preservation of value, exporters with no immediate use of the ZiG equivalent of the additional 5% of the export surrender proceeds will have an option to invest the funds in a USDDDF at the Reserve Bank which they can withdraw in ZiG on demand, at the prevailing interbank exchange rate on the settlement date.”

This, however, is unlikely to satisfy exporters, as most of their costs – from inputs to labour – are in US dollars, meaning they are losing money when they only get 70% of their money in dollars. Large exporters pay their energy bills – their biggest cost – in USD.

Here are other key takeaways from the latest monetary policy statement:

Easing forex trade restrictions

Central bank has removed limits on forex trade. When ZiG was launched last year, RBZ imposed a 5% trading margin for the interbank market.

The Bank now says this was “only applicable for the determination of the starting exchange rate, following the introduction of the new currency, ZiG”.

Mushayavanhu says banks and traders can now on-sell forex “at a margin consistent with international best practices”. Previously, a company could buy only up to US$500,000 per week on the forex market. These limits have been removed.

The measure is meant to help key sectors, such as retailers, who are facing the impact of gaps between the official and informal market rates. But the measure may not be enough to undo the damage caused by the skewed exchange rate.

Interest rates
RBZ has held interest rates at 35%. But the minimum bank deposit rates have been increased by 1.5 percentage points. A savings account now earns a minimum of 5% interest.

Gold and FX Reserves
RBZ says gold and forex reserves are now at US$550 million, 87% more than when the ZiG was launched last April. Mushayavanhu says this is enough to cover the ZiG deposits in the economy, which are currently ZiG13 billion – three times the cover of reserve money. RBZ’s gold reserves have now gone from 1.5 tonnes to 2.7 tonnes.

Forex interventions

RBZ has had to step in several times to save the ZiG by selling USD on the market. RBZ says it sold US$407.4 million between April and December last year, and an additional US$35 million in January.

Forex demand
According to RBZ, since June 2024, forex demand has averaged US$15-20 million per week. RBZ says banks are taking up 70% of the forex available on the market.

Forex receipts up, but so are imports
In 2024, Zimbabwe earned US$13.3 billion in foreign currency, 21% more than 2023’s $11 billion. Of this, US$7.9 billion is from exports. The Diaspora sent home US$2.15 billion. Inflows from NGOs – now under threat due to US aid cuts – were US$1.1 billion.

Mineral exports, the largest share of forex earnings, grew 7.8% to US$5.9 billion in 2024. Gold exports rose sharply by 37% to US$2.5 billion from US$1.8 billion in 2023, lifted by firmer prices in 2024.

However, imports also grew, rising 4.9% to US$9.1 billion in 2024. This was driven by food and grain imports, which went up 55.2% to US$976.1 million due to the drought. Other major imports were fuel, raw materials and cars.

New ZiG notes
Mushayavanhu says RBZ plans to release new ZiG notes with better “quality and design of ZiG bank notes in line with international standards.”

NewZwire