3 days ago
IMF wants Zimbabwe to adopt ZiG as sole legal tender
The International Monetary Fund (IMF) has expressed support for Zimbabwe's ZiG currency, stating it would like to see it 'fully become a national currency' as part of considerations for placing the country under a staff-monitored program.
The International Monetary Fund (IMF) supports Zimbabwe's ZiG currency initiative for potential full adoption as a national currency.
ZiG, introduced in April, is Zimbabwe's attempt to stabilize its economy and curb inflation by leveraging 2.5 tons of gold and notable foreign reserves.
Despite its backing, public trust in ZiG remains low, with most transactions favoring the US dollar and South African rand.
The International Monetary Fund (IMF) has expressed support for Zimbabwe's ZiG currency, stating it would like to see it 'fully become a national currency' as part of considerations for placing the country under a staff-monitored program.
Zimbabwe Gold (ZiG) was introduced by the Reserve Bank of Zimbabwe last April as part of efforts to stabilize the economy and shield citizens from extreme currency volatility and soaring inflation.
The currency is Zimbabwe's sixth attempt in 15 years to establish a stable local currency, and it is backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank.
Still, there are concerns the currency is on shaky ground. Despite being backed by gold, the ZiG has struggled to gain public trust, and government efforts to promote its use have mostly failed.
One currency, one rate
Wojciech Maliszewski, the Washington-based lender's mission chief, said several measures will need to be put in place to boost ZiG usage, including deepening the foreign exchange market to ensure full price discovery.
'Right now we see good stability in the official market and we also see a convergence between the parallel and official rate. Ideally, we would like to see an elimination of this gap, we would like to see one exchange rate. ' he said.
However, the ZiG's 43% devaluation in September, aimed at closing the gap between official and parallel exchange rates, along with its lack of convertibility, has prompted many citizens to continue favouring the U.S. dollar, according to Bloomberg.
About 80% of transactions in the country are still conducted in U.S. dollars, with some also made in South African rand. Last year, Zimbabwean President Emmerson Mnangagwa declared that the ZiG would become the sole legal tender by 2030, phasing out the existing multicurrency system.
