THE latest monetary policy update from the Reserve Bank of Zimbabwe paints a picture that many Zimbabweans have longed to see for years. Inflation has been tamed to an average of 4,2% between January and July 2026.
The exchange rate has held steady, moving only slightly between ZiG25 and ZiG27 per United States dollar.
Foreign currency receipts have grown by nearly 48%, foreign reserves now comfortably cover the local reserve money base and the banking sector remains sound with non-performing loans sitting well below the international benchmark. These are not small achievements for a country whose recent economic memory is dominated by the trauma of hyperinflation and currency collapse. They deserve to be acknowledged honestly, without cynicism, because policy discipline of this kind has not always been present in Zimbabwe’s monetary history.
Yet stability of this sort, however welcome, is not the same thing as a currency that citizens trust with their own money. A currency becomes truly national not when a central bank announces it, but when ordinary people choose to save in it, businesses choose to price in it and investors choose to hold their wealth in it without needing to convert it to something else the moment they receive it. This is the deeper meaning behind the idea of a mono-currency regime and it is the standard against which Zimbabwe’s current progress should be measured. The numbers from the first half of 2026 tell us that the technical conditions are improving. They do not yet tell us that confidence has been restored. Confidence is a slower and more stubborn thing to build than a policy rate or a reserve ratio and it is here that the real work of the transition still lies ahead.
It is useful to begin by being honest about why Zimbabweans remain cautious. The country has changed its currency multiple times since 2008 and on more than one occasion those changes wiped out the savings of ordinary citizens almost overnight. This history means that stability measured over seven months, however genuine, cannot by itself undo more than a decade of accumulated distrust. Economists who study behaviour under repeated currency shocks describe this as a credibility deficit, a situation where past broken promises make people discount even sincere present ones. Rebuilding credibility after such a deficit is not achieved through a single good monetary policy statement. It is achieved through a long, visible and uninterrupted pattern of consistent behaviour by the central bank and the government, sustained over years rather than months, until the public gradually stops pricing in the possibility of another collapse.
The first pillar of a credible path towards mono-currency, therefore, is fiscal discipline that matches monetary discipline. A central bank can hold interest rates steady and manage reserve money carefully, but if government spending continues to outpace revenue and the gap is closed by printing money or by accumulating domestic debt that the central bank eventually has to finance, all of that careful monetary work unravels quickly. Zimbabwe’s history offers a clear lesson here, because previous currency collapses were driven as much by fiscal indiscipline as by monetary mismanagement. The government must, therefore, be willing to fund its own operations, including salaries and subsidies, primarily through the local currency and through taxation rather than through foreign currency reserves or off-budget financing. This is not a comfortable adjustment, because it removes the fiscal cushion that foreign currency earnings currently provide, but it is a necessary one if the ZiG is to carry the weight of a functioning economy on its own.
The second pillar is genuine central bank independence, not merely in law but in practice. Many countries write independence into their central bank statutes and then quietly undermine it through political pressure to finance government deficits or to intervene in the exchange rate for short-term political convenience. Zimbabwe’s Reserve Bank has, in the period under review, shown discipline by meeting the quantitative targets set under the International Monetary Fund’s Staff Monitored Programme, including the important commitment of zero lending to government. This is precisely the kind of behaviour that must continue and deepen, because a central bank that is seen to bend to political demands during a difficult moment will lose in one incident the credibility it spent years building. Independence must also extend to the appointment processes, the transparency of decisionmaking, and the willingness of the bank to communicate honestly with the public even when the news is not entirely favourable.
The third pillar concerns the depth and honesty of the foreign exchange market itself. RBZ’s decision to develop a new foreign exchange trading platform for authorised dealers, currently undergoing World Bank technical validation, is a meaningful step, because a shallow and opaque foreign exchange market is one of the surest ways to keep a parallel market alive. As long as businesses and individuals believe that the official market cannot supply the foreign currency they need at a fair and predictable price, they will continue to seek alternatives outside the formal system and the parallel market premium, though narrowed to about 15%, will persist as a constant temptation. A truly functioning interbank market requires enough liquidity, enough willing participants and enough transparency in price discovery that both exporters and importers can transact without feeling that they are being disadvantaged. Narrowing that premium further and eventually closing it altogether, should be treated as one of the clearest markers of progress towards genuine mono-currency status.
The fourth pillar is the productive backing of the currency, meaning the real goods, services and exports that give money its underlying value. A currency cannot be sustained by policy statements or by gold reserves alone if the economy producing behind it remains narrow and import dependent. Zimbabwe’s growth in foreign currency receipts, reaching 10,7 billion United States dollars in the first half of 2026, is encouraging, but the composition of those receipts matters as much as their size. An economy that earns most of its foreign currency from a handful of mineral exports remains vulnerable to global price swings that are entirely outside its control. Diversifying export earnings towards agriculture, manufactured goods and services would reduce this vulnerability and give the ZiG a broader productive foundation to stand on. This is where the country’s agricultural potential, including the kind of smallholder and mixed farming enterprises many rural Zimbabweans are already pursuing, becomes not just a livelihood question but a genuine macroeconomic one.
The fifth pillar and perhaps the one most often overlooked in technical discussions, is the informal economy’s ability to absorb the currency in the first place. Zimbabwe’s informal sector accounts for a very large share of daily economic activity and much of that activity is conducted in foreign currency by habit and by necessity, since informal traders often lack access to the banking relationships that would make ZiG transactions convenient. A mono-currency strategy that focuses only on monetary technicalities while leaving the informal economy outside its reach will always run into a ceiling on how far de-dollarisation can go. Encouraging formalisation through simplified registration, accessible mobile banking, and tax incentives for businesses that price and transact in ZiG would gradually pull more of the economy into the formal net where monetary policy can actually be effective.
It is worth pausing here to consider what other countries have learned from walking a similar road, because Zimbabwe is not the first nation to attempt to restore trust in a battered currency. Israel’s stabilisation programme of 1985 remains one of the most studied cases of a country pulling itself back from the edge of hyperinflation. What made that programme work was not a single dramatic announcement but the combination of strict fiscal restraint, a credible exchange rate anchor and wage discipline agreed jointly between government, employers, and labour, all sustained long enough that inflation expectations genuinely changed rather than merely paused. The lesson for Zimbabwe is that stabilisation must be comprehensive and coordinated across fiscal, monetary and labour policy at the same time, because partial reforms tend to unravel under the first real shock.
Peru offers a related but distinct lesson, since it battled both hyperinflation and deep dollarisation of its banking system during the same period. Peru’s later success in reducing dollarisation came not from banning the use of the dollar but from making the local currency progressively more attractive through consistent low inflation, positive real interest rates on local currency savings, and macroprudential rules that made foreign currency lending more costly for banks relative to local currency lending. Zimbabwe’s current minimum interest rates on ZiG savings, still modest at five percent against far higher rates that would be needed to compete meaningfully with the psychological safety of the dollar, suggest there is still room to make holding ZiG genuinely rewarding rather than merely tolerated.
Closer to home, several sub-Saharan economies that have grappled with dollarisation offer a further caution, which is that de-dollarisation cannot be rushed through legal compulsion alone. Attempts to force de-dollarisation through decree, without first establishing the underlying conditions of low inflation and market confidence, have tended to drive transactions underground rather than eliminate them. This suggests that Zimbabwe’s authorities are right to speak of a gradual, market-led transition rather than a sudden switch, though gradualism only works if it is paired with visible, steady progress rather than open-ended delay, since the current target year of 2030 will only build confidence if each year between now and then shows measurable movement rather than repeated postponement.
Taken together, these lessons point to a roadmap that Zimbabwe should follow with discipline and patience in roughly equal measure. Government must continue to fund itself without leaning on the central bank’s printing press. The Reserve Bank must protect its independence even when political pressure argues otherwise. The foreign exchange market must be deepened until the parallel market has no reason to exist. The productive and export base must widen beyond a narrow set of commodities. The informal economy must be drawn gradually into the formal system rather than left outside it. And throughout all of this, the government and the central bank must communicate with the same honesty and consistency that has characterised the improvements recorded in the first half of 2026, because credibility, once damaged as deeply as Zimbabwe’s has been, is rebuilt one truthful monetary policy statement at a time.
None of this guarantees success and history reminds us that currency reforms can still fail even when the technical conditions look reasonably sound, because in the end, money is a form of collective trust before it is a form of policy. But the figures released in this mid-term review suggest that Zimbabwe has, for the first time in many years, assembled several of the necessary building blocks at once. What remains is the harder and slower task of turning technical stability into lived confidence, a task that will be measured not in quarters but in years of consistent behaviour and one that Zimbabwe, if it stays the course, has every reason to believe it can accomplish.
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