HARARE – A prominent economist and advisor to President Emmerson Mnangagwa, Eddie Cross has strongly criticised the Reserve Bank of Zimbabwe (RBZ)’s handling of the local currency, the ZiG, warning that if the central bank continues on its current path, the currency is likely headed for collapse.
Cross expressed his concerns in an opinion article directed at the Reserve Bank Governor, John Mushayavanhu, outlining a bleak outlook for the currency should current monetary policies persist.
Cross acknowledged the expertise within the Reserve Bank, noting, “I have a deep respect for the intellectual and institutional capacity of our Reserve Bank… But I listened to [Governor Mushayavanhu] carefully last week when he defended his position on the new currency. He was emphatic – what we are doing is working and will work.
The ZIG is here to stay! I’m afraid I have to disagree.” According to Cross, the ongoing strategies are unlikely to stabilise the local currency and could precipitate a faster decline than anticipated.
Criticism of Treasury Bills Policy
One of the core issues raised by Cross is the central bank’s practice of issuing treasury bills (TBs) denominated in ZiG as part of payment for exporters’ earnings. He points out that since April, exporters have been receiving two-year TBs with 6% interest for the 25% of their export earnings that are compulsorily liquidated into the local currency. With Zimbabwe’s exports estimated at around US$1 billion per month, this translates to approximately US$250 million being converted into ZiG monthly, or about US$3 billion annually.
Cross highlighted the devaluation of these TBs, which he says has significantly reduced their value: “That week the Governor had devalued those TBs by 84 per cent—wiping out ZIG 14 billion with the stroke of a pen. But that represents a gross deduction from the earnings of all exporters.” He described this policy as detrimental to the country’s exporters, effectively eroding their earnings while providing the government with access to undervalued foreign currency.
Concerns About Economic Stability and Currency Policy
Cross’s critique extends beyond the treasury bills, as he argues that the government’s approach to currency management contradicts its stated policy of de-dollarisation. He pointed to the increase in allowances for civil servants paid in hard currency, despite the official narrative of moving towards a local currency-driven economy. “What happens next is that they announce an increase in Civil Servants’ hard currency allowances, in complete contradiction to the stated policy of de-dollarisation. But it’s not good economics or even business, in fact, it’s the very opposite,” he wrote.
Cross warns that the current policy of printing money through deferred payments in the form of TBs is fundamentally flawed and risks a repeat of Zimbabwe’s previous hyperinflationary period. He referenced the disastrous period between 2014 and 2018, when the RBZ printed Nostro dollars, leading to economic instability and a loss of value in the Real Time Gross Settlement (RTGS) balances. He drew parallels to the current situation, saying, “God help us if we start printing Nostro dollars again, but the ZIG is a totally different matter.”
The Way Forward: Proposals for Currency Stabilisation
In his article, Cross outlined alternative measures he believes are necessary to stabilise the ZiG and restore confidence in the local currency. He stressed the importance of ensuring convertibility as the only real test of a currency’s value.
“The ONLY test of a currency is its convertibility on demand. Surely any street kid knows that… Fail that test and it is dead.”
Cross’s recommendations include allowing the compulsory currency liquidations to be sold on the interbank market at market-determined rates, a move he argues would better reflect the true value of the ZiG. Additionally, he proposed gradually increasing the liquidation threshold until the market achieves stability and the ZiG’s value stabilises at around 12 to 1 against the US dollar. He also suggested that Zimbabwe could strengthen its reserves by purchasing gold with the currency, rather than relying on US dollar reserves.
For Cross, the key to sustainable de-dollarisation lies in creating a currency that holds real market value and ensuring transparency in the government’s use of foreign currency. “If the Government wants hard currency for something, they should buy it off the market like everyone else,” he wrote, adding that such an approach would foster a more stable and transparent financial system.
Broader Economic Implications
Cross’s critical assessment of the ZiG comes at a time when Zimbabwe is struggling with economic instability, a shrinking formal sector, and dwindling confidence in its local currency. The government’s policies have led to a sharp decline in the use of the US dollar in formal transactions—from 85% to just 25% over the past five months—shifting the burden onto a currency whose value many, including Cross, consider unsustainable.
His remarks echo broader concerns within Zimbabwe’s business community and among economic analysts, who fear that the current trajectory could undermine the country’s fragile economic recovery. With a history of hyperinflation still fresh in the minds of Zimbabweans, many are wary of repeating past mistakes. As the debate over the future of the ZiG intensifies, all eyes will be on the RBZ and the Ministry of Finance to see whether they will heed the warnings from Cross and other economists.
For now, the fate of the ZiG remains uncertain, with potential implications for Zimbabwe’s export sector, foreign investment climate, and the broader economy. Cross’s warnings serve as a call for urgent re-evaluation of policies, urging Zimbabwe’s leaders to adopt a more market-oriented approach to ensure the survival of the local currency and the stability of the economy.