The 2026 Monetary Policy Statement, presented by Governor John Mushayavanhu, outlines the Reserve Bank of Zimbabwe’s (RBZ) strategic roadmap for maintaining economic stability through the Zimbabwe Gold (ZiG) currency.
Here is a summary of the high-level themes and key details from the presentation:
1. Currency and Exchange Rate Stability
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ZiG Performance: The Governor highlighted that the ZiG has successfully stabilized the exchange rate and significantly reduced month-on-month inflation since its introduction. [08:14]
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Exchange Rate Policy: The RBZ will continue to allow the ZiG exchange rate to be determined by the market, with interventions limited to managing excessive volatility. [15:32]
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Reserve Backing: The central bank reaffirmed its commitment to backing every ZiG in circulation with a combination of foreign currency reserves and precious metals (primarily gold). [22:45]
2. Inflation Management and Interest Rates
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Inflation Targets: The RBZ aims to contain year-on-year inflation within a single-digit range by the end of 2026. [10:05]
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Policy Rates: The Bank announced a recalibration of the bank policy rate to align with inflation expectations, ensuring that borrowing costs remain productive while discouraging speculative activities. [28:19]
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Tight Monetary Stance: The Governor emphasized a continued “tight monetary policy” to restrict the growth of money supply (M3), which is identified as the primary driver of past inflationary pressures. [31:40]
3. Financial Sector Resilience and Inclusion
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Banking Stability: The presentation noted that the banking sector remains sound, with capital adequacy ratios generally above the required minimums. [36:12]
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NPL Management: Non-Performing Loans (NPLs) have been kept under control, though the Bank will increase monitoring of credit risk in the agriculture and mining sectors. [39:55]
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Digital Transformation: A strong focus remains on promoting the use of ZiG for all digital transactions and expanding financial inclusion in rural areas through mobile banking. [44:21]
4. Structural Reforms and Market Liquidity
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Willing-Buyer Willing-Seller (WBWS): The RBZ will continue refining the WBWS market to ensure that businesses have timely access to foreign currency for critical imports. [18:50]
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Compulsory Liquidations: A portion of export proceeds will continue to be liquidated into ZiG to ensure there is consistent liquidity in the local currency market. [48:12]
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Gold Mobilization: The central bank will enhance its gold mobilization efforts to continue building the reserves that underpin the ZiG currency. [52:30]
5. Fiscal and Monetary Policy Coordination
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Reduced Government Borrowing: The Governor stressed the importance of the Treasury’s commitment to not borrow from the central bank, which prevents “printing money” to fund the budget. [55:04]
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Tax Payments in ZiG: Encouraging the payment of taxes and government fees in ZiG was highlighted as a critical measure to boost demand for the local currency. [57:15]
