IMF mission to assess new ZiG currency’s impact on Zimbabwe’s economy 

Spread This News

By James Muonwa 

AN International Monetary Fund (IMF) consultation mission will later this June visit Zimbabwe to assess the country’s economic performance on the back of a newly introduced currency, the Zimbabwe Gold (ZiG).

ZiG has been the official currency since April 8, 2024, backed by US$575 million worth of hard assets: foreign currencies, gold, and other precious metals.

IMF spokesperson, Julie Kozack, confirmed the routine consultations, which will also focus on the impact of the new currency.

The ZiG is the sixth currency to be introduced in 15 years as Zimbabwe battles galloping inflation.

“On Zimbabwe, our staff is expected to conduct the Article 4 consultations later this month.

“Part of this Article 4 consultation will assess the entire economy as we always do, but also we will be looking at the new currency arrangement, the ZiG, and this Article 4 mission will give us the opportunity to do that,” said Kozack.

“Zimbabwe did introduce a new currency backed by a basket of foreign currencies and other assets, including gold and of course we stand ready to discuss these with the authorities and to support their efforts to restore macroeconomic stability,” she added.

Introduction of the ZiG has elicited mixed reactions in the market.

Some analysts say introduction of ZiG is not merely a change in currency; it is testament to Zimbabwe’s unwavering resolve and the collective ambition to surge forward into a realm of possibilities that are as rich and as promising as the gold that backs the new currency.

They argue that with the dawn of ZiG, Zimbabwe stands at the threshold of transformation, poised to redefine its financial destiny.

According to a recent report by the ZImbabwe National Statistical Agency (Zimstats), the ZiG tamed monthly inflation to 0.6% on the account of significant price declines in the local unit.

On the contrary, the Institute of Security Studies (ISS) argues Zimbabwe’s new ZiG is doomed by overall lack of transparency.

“Economic mismanagement has stripped citizens’ trust in the government and threatens the new currency’s viability.

“The struggle to stabilise Zimbabwe’s economy continues, with no signs of relief for ordinary citizens. The recently introduced currency, ZiG, seems destined to suffer the same fate as the five previous attempts to create a local currency,” ISS has noted.

Zimbabwe’s economy thrives on informal trade, with most traders operating outside the banking system and the Reserve Bank of Zimbabwe (RBZ)’s decision to introduce the ZiG electronically before hard currency sparked panic and non-availability of the new currency continues to plague markets.

Among informal traders, the ZiG is not readily accepted, just as it is not in the public transportation which is struggling with change of smaller ZiG denominations.

“ZiG has brought confusion and uncertainty,” said one trader.