IMF to Scrutinize Zimbabwe’s New ZiG Currency in Economic Health Check

An International Monetary Fund (IMF) consultation mission is scheduled to visit Zimbabwe in June to assess the country’s economic performance following the introduction of the new Zimbabwe Gold (ZiG) currency.

The ZiG, which became the official currency on April 8, 2024, is backed by a basket of foreign currencies, gold, and other precious metals worth US$575 million.

The IMF’s routine consultations will focus on the impact of the new currency on the economy, which has struggled with galloping inflation. This is the sixth currency introduced in 15 years, and its introduction has elicited mixed reactions in the market.

Some analysts view the ZiG as a symbol of Zimbabwe’s determination to restore macroeconomic stability and transform its financial destiny.

However, others, like the Institute of Security Studies (ISS), are skeptical about the ZiG’s viability due to the government’s lack of transparency and history of economic mismanagement. The ISS notes that the new currency faces the same fate as previous attempts to create a local currency, which failed due to lack of trust in the government.

ZiG Currency: Zimbabwe Crackdown on Black Market Exchange

LAfricaMobile Secures $4.6m in Series A Funding to Expand Cloud Communication Services

Nigerian musician Chinedu Okoli, known as Flavour, buries his father

The Zimbabwean economy is largely informal, with most traders operating outside the banking system. The Reserve Bank of Zimbabwe’s decision to introduce the ZiG electronically before hard currency sparked panic, and the non-availability of smaller denominations continues to plague markets.

As a result, the ZiG is not readily accepted among informal traders and public transportation operators.

The IMF’s assessment will provide valuable insights into the effectiveness of the ZiG in stabilizing the economy and restoring trust in the government’s economic management. The outcome of this consultation will be crucial in shaping the future of Zimbabwe’s economic landscape.

Zimbabwe’s economy has been plagued by hyperinflation, currency fluctuations, and a lack of foreign investment. The introduction of the ZiG is seen as a bold move to address these challenges, but its success depends on various factors, including the government’s commitment to transparency and economic reform.

The ZiG has already shown some positive signs, with monthly inflation declining to 0.6% according to the Zimbabwe National Statistical Agency (Zimstats).

However, this decline may be attributed to other factors, such as the recent decline in global commodity prices.

The IMF’s consultation mission will also assess the impact of the ZiG on the country’s balance of payments, fiscal policy, and monetary policy. The mission will engage with government officials, business leaders, and other stakeholders to gather information and data on the economy.

Ultimately, the success of the ZiG will depend on the government’s ability to restore trust and confidence in the economy. This requires a commitment to transparency, accountability, and good governance.

The IMF’s consultation mission will provide a valuable opportunity for Zimbabwe to take a critical look at its economic policies and strategies and make the necessary adjustments to promote sustainable economic growth.