IMF urges Zimbabwe to provide more clarity on de-dollarization plan

By Xinhua

HARARE: The International Monetary Fund (IMF) has called on Zimbabwe to provide greater clarity on its plan to phase out the U.S. dollar and adopt the Zimbabwe Gold (ZiG) as the country’s sole currency by 2030.

In a report released Thursday night following the conclusion of its consultation with Zimbabwe, the IMF said Zimbabwe must clarify whether the use of ZiG will be limited to domestic transactions and whether bank deposits will be allowed to remain denominated in both currencies.

The IMF said that for now, the lack of clarity about operational implications for existing foreign currency bank deposits has increased uncertainty and weighed on financial intermediation.

“Additional clarity on the mono-currency transitional plan would help reduce uncertainty. The authorities should provide more clarity on the operational implications of the mono-currency transitional plan,” the IMF said.

In August, the Reserve Bank of Zimbabwe, the country’s central bank, unveiled a de-dollarization roadmap alongside a new five-year economic blueprint. It has set targets to be met before the ZiG, a gold-backed currency, becomes Zimbabwe’s sole currency by the end of the decade.

In the report, the IMF said further steps are needed to increase the usage of ZiG in the economy, noting that fiscal discipline and enhancements to the current monetary and foreign exchange frameworks would help improve confidence in ZiG.

Zimbabwe adopted a multi-currency system in 2009 after severe hyperinflation rendered the local dollar worthless. The country introduced ZiG to curb inflation and reduce reliance on the U.S. dollar, which currently accounts for a majority of domestic transactions.