Fulfilment of Conditions Precedent critical
In its five-year Strategy Plan (2026–2030), the Reserve Bank of Zimbabwe (RBZ) has vowed to ensure that fulfilment of conditions precedent (CP) is critical to any credible transition to a mono-currency system.
By placing conditions precedent at the centre of policy, rather than treating them as boxes to be ticked along the way, the RBZ is attempting to rebuild what has been most elusive in Zimbabwe’s monetary history, trust.
Markets, however, remain jittery not because stability has not improved, but because memories of hyperinflation, currency erosion and policy reversals remain deeply embedded in economic behaviour.
In such an environment, fulfilment of CPs is not optional. It is existential.
Governor John Mushayavanhu’s articulation of the CPs is appropriately uncompromising.
Sustained single-digit inflation, adequate foreign-exchange reserves equivalent to three to six months of import cover, a unified and efficient foreign-exchange market, exchange-rate stability around the ZiG, deepening domestic demand for the local currency, a resilient national payments system, and tight fiscal-monetary coordination, these are the non-negotiable building blocks of a viable currency.
Without their full and sustained achievement, any mono-currency would be stillborn.
This is why the governor’s assertion that the prerequisites for success will “pre-occupy the Reserve Bank in the foreseeable future” is arguably the most important policy signal in the entire strategy.
Analysts are correct to caution that timelines must remain subordinate to outcomes.
They say dedollarisation cannot be rushed, legislated or wished into existence. It is a behavioural shift that follows confidence, not the other way around.
Where a large informal sector remains deeply dollarised, imposing a mono-currency without meeting the CPs would simply push economic activity further into the shadows, undermining policy effectiveness and eroding legitimacy.
Among the CPs, reserve accumulation stands out as the most demanding and most revealing. Building import cover from current levels to three months or more within five years will require sustained fiscal discipline, export growth, external re-engagement and the avoidance of policy slippage. This is precisely why fulfilment of CPs is critical: it forces policymakers to confront constraints honestly, rather than masking them with administrative controls.
There are reasons for cautious optimism. Inflation has moderated, exchange-rate volatility has eased, electronic payments have expanded and confidence in the ZiG has shown early signs of consolidation. Yet these gains remain fragile. High interest rates are constraining productive lending, liquidity remains tight, and informality continues to dominate large segments of the economy.
Without formalisation, broader tax compliance and deeper financial inclusion, the CPs will remain vulnerable to reversal.
A central bank cannot anchor a currency in the presence of fiscal indiscipline, quasi-fiscal operations or expenditure overruns.
Tight coordination between fiscal and monetary authorities is therefore not a technical preference, it is a survival requirement.
