Let’s get this clear: Zimbabwe’s current monetary policy is being effectively run through the Ministry of Finance, with the Treasury functioning more like a large-scale stash-fund or “retail bank.” This blending of fiscal and monetary responsibilities has created a situation where the Central Bank of Zimbabwe (RBZ) is playing a secondary role, while the Treasury, driven by political motives, has taken over key economic functions. This shift explains why the government appointed a former bank CEO as Permanent Secretary of the Finance Ministry—it underscores the fusion of banking and treasury operations into one entity.
By Brighton Musonza
At the heart of this issue is the Central Bank’s reduced influence. The RBZ now issues only a small portion of the Zimbabwe Gold (ZiG) currency, while the Ministry of Finance focuses heavily on acquiring U.S. dollars, the de facto currency Zimbabwe has relied on since the adoption of a multicurrency system. The result is an unconventional and irregular economic structure, where the Central Bank has little say in managing the money supply, and fiscal policy, driven by politicians, dominates the country’s economic agenda.
In a properly functioning economy, the Central Bank—like the RBZ—should be independently responsible for managing monetary policy. Its role is crucial: it controls interest rates, manages inflation, and regulates the supply of money. However, in Zimbabwe, these duties have largely been taken over by the Treasury, especially in managing foreign currency inflows. Since the country is dollarised, much of the exchange rate market revolves around U.S. dollars, giving the Treasury significant control over the most critical aspects of Zimbabwe’s economy.
This overlap of fiscal and monetary roles has led to corruption, inefficiencies, and a lack of coherent policy direction. Politicians, with their hands on both the country’s fiscal and monetary levers, have access to vast sums of U.S. dollars, which has further fuelled misuse and policy distortions. The very foundation of sound economic management—keeping fiscal and monetary powers separate—has been eroded.
The reliance on the U.S. dollar has also created major limitations for the RBZ. The Central Bank has struggled to control inflation or manage the exchange rate, as these key functions are heavily influenced by the Treasury’s U.S. dollar-driven agenda. While the RBZ issues ZiG with tight restrictions, this local currency exists in a market dominated by U.S. dollars, further skewing the system. As a result, Zimbabwe’s monetary system has become a patchwork of disconnected policies, attempting to address both local currency needs and foreign currency realities without a clear separation of powers.
This situation reflects a much deeper problem: the politicisation of Zimbabwe’s economic management. By allowing fiscal policy to bleed into monetary functions, the government has effectively politicised the economy, turning it into a tool for short-term political gain rather than long-term stability. The ZANU PF government’s heavy-handed involvement in economic management has only served to heighten instability, with policies driven by political expedience rather than sound economics.
Zimbabwe’s path forward requires a radical shift in governance. The Central Bank must regain full authority over monetary policy, and its role must be clearly defined and independent of fiscal operations. Without this distinction, the country will continue to face cycles of economic instability, driven by blurred lines between monetary and fiscal policy.
Effective economic governance demands a system where fiscal and monetary policies work together but remain under distinct, independent oversight. A Central Bank must be able to function without political interference, while the Treasury should focus on managing public finances responsibly. Only by restoring this balance can Zimbabwe hope to stabilise its economy and build a foundation for sustainable growth.
At the core of Zimbabwe’s economic challenges lies the need for transparency and accountability. The current system, where political actors control both the fiscal and monetary levers, leaves too much room for corruption, inefficiency, and policy misalignment. By separating these roles, Zimbabwe can move toward a more stable and prosperous future—one where economic management is based on sound policy, not political interests.
Ultimately, Zimbabwe’s future depends on restoring confidence in its economic institutions. The RBZ must be empowered to manage monetary policy independently, while the Treasury should focus on its fiscal responsibilities. Until this separation of powers is achieved, Zimbabwe will remain trapped in a cycle of instability, where short-term political objectives overshadow the long-term economic health of the nation.