• ZiG has shown a marginal decline, closing at 26.98, a slight drop from 26.94 last week
• Zimbabwe's monetary history is fraught with failures, including hyperinflation and fiscal mismanagement, leading to significant public distrust
• The IMF's recommendation for the ZiG to become the sole currency faces obstacles, at least for now

Harare- The Zimbabwe Gold (ZiG) has sustained marginal erosion as it struggles to find its course. Week on week,  the ZiG closed at 26.9768 per USD on the 1th of June 2025, a marginal decline from 26.9401 the previous week, representing a week-on-week loss of approximately 0.14%. By June 16, 2025, it further weakened to 26.9796 and 26.9815 as of today.

The last appreciation occurred on May 21, 2025, when it rose slightly from 26.9786 to 26.885, but the currency has since trended downward, with cumulative year-to-date losses of roughly 99% from its initial rate of 13.56 per USD, exacerbated by a 75% depreciation on the parallel market by February 2025.

The International Monetary Fund (IMF) has urged Zimbabwe to adopt the ZiG as the sole currency, phasing out the US dollar, but this goal faces significant hurdles given historical currency failures, public distrust, and limited ZiG adoption.

The IMF, through its proposed Staff Monitored Program (SMP), aims to support Zimbabwe’s economic reforms, but feasibility remains uncertain.

This analysis explores the history of Zimbabwe’s currencies, the 2019 USD ban’s fallout, confidence erosion, and the prerequisites for a successful ZiG mono-currency, with a detailed focus on the IMF’s SMP discussions as of June 2025.

Historical Trajectory of Zimbabwe’s Currencies

Zimbabwe’s monetary history is riddled with failures, each marked by hyperinflation, fiscal mismanagement, and eroded public trust. The Zimbabwe Dollar (ZWD), introduced in 1980 to replace the Rhodesian Dollar at par, was initially stable but collapsed by 2008.

Political instability, unbudgeted spending (e.g., the 1997 Congo intervention), and chaotic land reforms triggered hyperinflation, peaking at 79.6 billion percent month-on-month in November 2008.

A $100 trillion ZWD note became worthless, and the Reserve Bank of Zimbabwe (RBZ) redenominated the currency three times (2006, 2008, 2009), slashing zeros without restoring stability.

By April 2009, the ZWD was abandoned for a multicurrency system, primarily using the USD and South African rand, which reduced inflation to 2.1% annually from 2010 to 2018 and supported GDP growth of 5.4% yearly.

Bearer Cheques, introduced in 2003 to address cash shortages, were quickly devalued due to excessive printing and lack of credible backing.

By 2008, they were obsolete, replaced by new ZWD notes.

Bond Notes, launched in 2016 and pegged 1:1 with the USD, were backed by a $200 million Afreximbank loan but faced immediate rejection due to fears of hyperinflation.

By 2018, they traded at 50% discounts on the black market as the RBZ printed more to cover deficits.

The Real Time Gross Settlement (RTGS) Dollar, introduced in February 2019 at 2.5 ZWL per USD, consolidated electronic balances and Bond Notes.

Renamed the ZWL, it became the sole legal tender in June 2019 but rapidly depreciated, reaching 30,000 per USD officially and 40,000 on the black market by April 2024, with inflation at 55.3%.

These failures were driven by fiscal indiscipline, insufficient reserves, and public distrust, epitomised by the 2008 crisis where savings vanished.

The 2019 USD Ban and Economic Consequences

In June 2019, Zimbabwe banned foreign currencies, making the RTGS Dollar (ZWL) the sole legal tender to regain monetary control. This policy, led by Finance Minister Mthuli Ncube, failed spectacularly.

By December 2019, the ZWL lost 61%, reaching 16.77 per USD officially and more than doubling on the black market.

Inflation soared to 500% by late 2019 and 837.53% by July 2020, driven by RBZ printing to finance deficits (7.1% of GDP in 2018).

GDP contracted by 7.8% in 2020, worsened by a 2019 drought and COVID-19.

Fuel shortages caused long queues, and businesses hoarded USD, fueling a black market with rates like 330–400 ZWL per USD in May 2022 versus 165.94 officially.

By March 2020, the government reinstated the multicurrency system as the ZWL hit 80 per USD on the black market by June 2020.

Savings lost 80% in three months by April 2024, mirroring the 2008 crisis where $100,000 ZWD became equivalent to $5 post-demonetisation.

ZiG’s Performance and Confidence Erosion

The ZiG, backed by $629 million in gold and foreign reserves, started at 13.56 per USD but faced immediate challenges.

A 42.55% devaluation on September 27, 2024, adjusted the rate to 24.4 per USD, with the parallel market hitting 50 per USD by October 2024, reflecting a 41% premium.

By February 2025, the ZiG lost 75% on the unregulated market, despite RBZ interventions of $64 million in September and $50 million in October 2024.

Inflation in ZiG terms hit 37.2% in September 2024, compared to 0.7% in USD, and rose to 14.6% year-on-year by January 2025.

The ZiG’s limited use for essentials like fuel, medical bills, passports, and rentals, which dominate transactions, undermines its stability.

Government mandates requiring 50% of taxes in ZiG are undercut by its refusal to accept ZiG for services like passports, fuel signaling distrust.

With 70% of transactions in USD by August 2024, public confidence remains low, rooted in historical failures like 2008 and 2019.

IMF’s Staff Monitored Program (SMP) Details

The IMF’s SMP is an informal agreement to monitor a country’s economic policies without financial assistance, aimed at building a track record for debt restructuring and reengagement. Zimbabwe requested an SMP in 2023, with discussions advancing in 2025.

A mission led by Wojciech Maliszewski visited Harare from January 30 to February 13, 2025, to define the SMP’s parameters, focusing on macroeconomic stability and debt resolution. Previous SMPs (2014-2016, 2019-2020) faced challenges. The 2019 SMP, approved May 15, 2019, was derailed by external shocks (Cyclone Idai, drought) and policy missteps, ending off-track in 2020. The current SMP, expected to be finalised by October 2025, aims to address these risks through quarterly monitoring and technical assistance.

Feasibility of ZiG Mono-currency

The IMF’s push for ZiG as the sole currency is ambitious but faces significant obstacles. Zimbabwe’s history of fiscal indiscipline, with RBZ printing money to cover deficits (e.g., €500,000 weekly in 2008), and low reserves (below one month of imports) mirror conditions that doomed past attempts.

The 2019 monocurrency experiment triggered hyperinflation and shortages, forcing a USD return. Current ZiG challenges like devaluation, limited adoption, and a 41% parallel market premium suggest similar risks.

The SMP’s focus on fiscal discipline and reserves is sound, but implementation is doubtful given political interference, as seen in 2008 and 2019. Debt (96.7% of GDP) and corruption (157/180 on Transparency International’s  index) further complicate reforms.

Confidence Erosion and Behavioral Economics

Public distrust, a key barrier, stems from repeated economic shocks. The 2008 hyperinflation obliterated savings, with $100,000 ZWD equating to $5 post-demonetisation. The 2019 ZWL collapse and 2024 ZiG devaluation (43% overnight) reinforced fears of sudden losses.

Behavioural economics explains this: Zimbabweans treat ZiG as a “hot potato,” spending it quickly while hoarding USD, as noted by economist Tendai Ruben Mbofana. The informal economy, handling 80% of transactions in USD by March 2024, thrives on this distrust. The government’s reluctance to accept ZiG for key services like fuel and passports signals a lack of commitment, further eroding confidence.

Prerequisites for ZiG Mono-currency

To adopt ZiG as the sole currency, Zimbabwe must address confidence restoration. Transparent monetary policies, independent RBZ governance, and public reserve audits are critical. The government must accept ZiG for all services and engage the informal sector through digital payments. However, this should not be an overnight decision.

Reserves must cover three months of imports, requiring export growth in agriculture (17% of GDP) and mining (12% of GDP), despite 2024 droughts and low commodity prices.

Government should encourage fiscal and monetary discipline. It should eliminate money printing, balance budgets, and reduce corruption. Debt restructuring and clearing arrears could unlock IMF support.

It should ensure ZiG’s wide acceptance before phasing out USD, avoiding the 2019 rush that led to shortages and inflation.

Therefore, Zimbabwe is not ready to adopt ZiG as the sole currency without transformative reforms. The IMF’s SMP provides a roadmap, but historical failures, low reserves, and distrust pose significant risks. The 2019 USD ban’s collapse highlights the dangers of premature mono-currency.

A gradual approach, prioritising trust, reserves, and discipline, is essential to avoid repeating past mistakes. The SMP’s success hinges on political will, which ZANU-PF’s history of short-termism undermines. Without addressing these challenges, ZiG risks joining its predecessors in failure.

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