
As Zimbabwe prepares for the release of its 2025 Monetary Policy Statement (MPS) in February, industry stakeholders are urging the Reserve Bank of Zimbabwe (RBZ) to implement critical reforms to stabilize the economy and enhance liquidity.
Key proposals include adopting a managed float exchange rate system, adjusting foreign exchange allocation mechanisms, and reducing USD statutory reserves to boost liquidity in the formal sector.
The Confederation of Zimbabwe Industries (CZI), a leading industry body, has been at the forefront of these recommendations. While the RBZ has made significant strides in stabilizing the official exchange rate and narrowing the parallel market premium, CZI believes further refinements are necessary to build confidence in the Zimbabwe Gold (ZiG) currency and address lingering economic challenges.
Proposed Reforms
CZI has advocated for a shift from the current exchange rate framework to a managed float system, which would allow market forces to play a greater role while curbing extreme volatility. “A managed float would provide a balance between stability and flexibility,” a source close to the discussions explained. “It would help address the ZiG confidence deficit reflected in the parallel market premium.”
Additionally, CZI has proposed replacing weekly foreign exchange allocations with staggered daily distributions. This change, stakeholders argue, would reduce gaps in the system that are often exploited by the parallel market. The industry body also recommended that Treasury Bills (TBs) issued to clear the foreign currency auction backlog be accepted as security for the Targeted Finance Facility (TFF). “This move would improve confidence in the forex auction system and make it more predictable for businesses,” the source added.
RBZ’s Stance on Monetary Policy
RBZ Governor Dr. John Mushayavanhu emphasized that the central bank’s primary focus remains on balancing inflation control with economic growth. “Monetary policy is an aggregate demand management tool aimed at influencing interest rates and monetary aggregates to affect inflation, employment, and output dynamics,” he stated.
Dr. Mushayavanhu also highlighted the challenges of navigating high inflation pressures and weak economic growth simultaneously. “To mitigate the impact of monetary tightening, central banks worldwide use tailored and targeted approaches to stimulate production,” he said, referencing the RBZ’s Term Financing initiatives.
The Governor confirmed that the 2025 MPS would be released in early February after analyzing economic data and consulting stakeholders. “The public may expect the Reserve Bank to release the Monetary Policy Statement in early February,” he said.
Banking Sector Perspectives
The Bankers Association of Zimbabwe (BAZ) has echoed calls for a conservative monetary policy stance, emphasizing the importance of stability. “Historical trends indicate that the RBZ has consistently prioritized stability through a tight monetary policy framework,” said BAZ Chief Executive Fanwell Mutogo.
Mutogo also highlighted the need for policies that enhance financial inclusion, particularly for rural and underserved communities. “Local banks have been collaborating with mobile network operators to expand access to banking services through mobile banking and financial technology solutions,” he noted.
Challenges and Opportunities
While the RBZ has made progress in stabilizing the exchange rate and reducing the parallel market premium, challenges remain. The ZiG currency continues to face a confidence deficit, and liquidity constraints persist in the formal sector. Stakeholders argue that addressing these issues requires a combination of market-driven mechanisms and policy adjustments.
The upcoming MPS is expected to provide clarity on the central bank’s approach to these challenges. However, it remains unclear whether the RBZ will adopt the proposed reforms or maintain its current policy framework.
Looking Ahead
As Zimbabwe navigates its economic recovery, the 2025 MPS will be a critical document shaping the country’s monetary policy direction. Stakeholders across industries are hopeful that the RBZ will introduce measures to enhance liquidity, stabilize the exchange rate, and foster confidence in the ZiG currency.
For now, proposals such as the managed float exchange rate system and changes to forex allocations remain industry suggestions. All eyes will be on the RBZ in early February as it unveils its plans to address Zimbabwe’s economic challenges and support sustainable growth.
Reporting by Tapiwanashe Mangwiro (Business Weekly).