IMF Praises Zimbabwe’s New Gold-Backed Currency

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HARARE — The International Monetary Fund (IMF) has endorsed Zimbabwe’s introduction of a new gold-backed currency, the ZiG, marking its first substantial comment on the initiative since its launch last month.

“The introduction of ZiG represents an important policy action accompanied by several complementary policy changes — including monetary, exchange rate, and fiscal policy measures,” an IMF spokesperson stated in an emailed response to Bloomberg’s inquiries.

ZiG, short for Zimbabwe Gold, was unveiled on April 5, marking the southern African nation’s sixth attempt in 15 years to establish a stable currency. Previous efforts have failed due to hyperinflation and collapsing foreign exchange values.

This time, the central bank is taking a cautious approach, promising not to print more ZiG unless they are backed by reserves. Additionally, it has pledged not to finance government spending by printing money—a practice that undermined past currency versions and led to a predominant reliance on US dollars for transactions.

Following the ZiG’s launch, the central bank has reset its benchmark interest rate to 20% from 130%, which was previously the highest rate globally.

It also publishes the ZiG/dollar exchange rate daily on its website. The government has intensified its crackdown on unofficial market trading of the currency, threatening fines for those not adhering to the official exchange rate.

On Thursday, the ZiG reached its highest level against the US dollar, trading at 13.21 per dollar, a 2.6% increase from its initial trading value on April 8.

The IMF announced that it will send a team to Zimbabwe in late June for the country’s regular economic assessment. This visit will provide an opportunity to review the performance of the new currency arrangement, according to the IMF spokesperson. Zimbabwe’s Finance Minister, Mthuli Ncube, expressed hopes for a staff-monitored program in the latter half of the year during an interview with Bloomberg last month.

Zimbabwe, which has been excluded from international capital markets since 1999 due to debt defaults, is striving to regain its international standing. This effort continues despite concerns from Western capitals about its human rights record.

While the US has lifted sanctions on some state-owned enterprises, it maintains sanctions on President Emmerson Mnangagwa and other top officials.