Stability must lead Zimbabwe’s monocurrency ambition
Zimbabwe’s plan to adopt a monocurrency by 2030 is bold and forward-looking.
Yet economists warn that the country’s most pressing obstacle is not the central bank, but fiscal mismanagement at the Treasury.
While much attention has focused on the Reserve Bank of Zimbabwe’s (RBZ) initiatives, it is the accumulation of domestic debt, unpaid obligations, and inconsistent fiscal policies that pose the greatest threat to a unified currency.
Without addressing these structural weaknesses, even the most meticulously planned central bank measures risk failure.
Domestic debt has surged to unsustainable levels, with billions owed to service providers and Treasury Bills maturing without payment. This growing burden constrains businesses, crowding out private sector financing, limiting operational capacity, and eroding investor confidence. When companies struggle with unpaid government obligations, the risk of systemic financial instability becomes tangible, undermining the broader economic environment that a monocurrency seeks to stabilize.
Policy missteps in managing foreign exchange exacerbate these challenges. Obligations for exporters to convert significant portions of their foreign currency earnings into local currency have left businesses struggling to meet operational costs. This approach constrains production, discourages investment, and undermines the confidence necessary for a credible, stable currency system. Financial stability cannot thrive where the private sector is consistently disadvantaged by government policy.
There are signs of progress. Foreign currency reserves have risen significantly in recent months, and import cover has improved, signalling steps toward macroeconomic resilience. However, fiscal discipline remains weak, and the lack of coordination between fiscal and monetary authorities continues to erode confidence. Monetary reform cannot succeed in isolation; it requires a synchronized national approach prioritizing stability, transparency, and predictable financial management.
Institutional independence is equally critical. The central bank must operate free from political and fiscal pressures to maintain credibility. If Treasury borrowing needs or policy choices force the central bank to intervene, the risk of undermining monetary stability grows substantially. Strengthening institutional frameworks and ensuring timely fulfillment of obligations is essential to prevent past cycles of currency volatility from repeating.
The private sector’s confidence is central to success. Monetary reform must be market-led and consensus-driven, with businesses assured of predictable and fair fiscal and monetary policies.
Rushing a monocurrency without addressing structural weaknesses in public finance risks repeating historical mistakes, squandering the opportunity for sustainable economic transformation. Stability is not merely desirable, it is a prerequisite for growth, investment, and public trust in the currency.
Zimbabwe’s monocurrency vision is both ambitious and necessary, offering the potential to unify the financial system, stimulate investment, and strengthen confidence in the economy.
Yet ambition without stability is perilous. Prioritizing fiscal discipline, institutional independence, and coherent policy coordination is essential to avoid undermining the RBZ’s efforts.
The success of the 2030 monocurrency plan will ultimately hinge on the Treasury’s ability to manage public finances responsibly, safeguard the private sector, and build a foundation of trust capable of sustaining the currency for decades.
The lesson is clear: sustainable monetary reform requires stability first. Without it, the monocurrency will remain aspirational rather than transformative, leaving the economy exposed to the cycles of uncertainty that have long challenged Zimbabwe.
