The International Monetary Fund (IMF), a globally respected institution staffed by learned technocrats, recently made a pronouncement that has raised more than a few eyebrows in Zimbabwe. According to a report by Bloomberg, the IMF wants to see the Zimbabwe Gold, or ZiG, “fully becoming a national currency.” On the surface, this sounds like a vote of confidence. However, reading between the lines of diplomatic language, this likely means the IMF is encouraging a move towards a mono-currency system, where the ZiG would become the sole legal tender, sidelining the United States dollar which currently dominates the economy.

While the IMF’s recommendations are undoubtedly based on sound economic theory, applying them to the volatile and unique reality of Zimbabwe is fraught with peril. The government, for its part, would welcome such a move as it would grant it immense control over the country’s monetary and fiscal policy. However, for the average Zimbabwean who has weathered multiple economic storms, this proposition is not a path to nirvana but a potential highway back to economic ruin. Let us break down why this is a terrible idea at this moment.

The Unresolved Exchange Rate Dilemma

To be fair, the IMF is not making a blanket recommendation without preconditions. The mission chief, Wojciech Maliszewski, highlighted the need for several measures, chief among them being the deepening of the foreign-exchange market to ensure the official and parallel market rates converge into a single, unified exchange rate.

This is a fundamental and necessary step. For those unfamiliar, Zimbabwe currently operates with two main exchange rates. There is the official interbank rate, which is used in the formal banking system. This market is heavily restricted; the government maintains a priority list for who gets to access the limited foreign currency, and it is certainly not for paying for your DStv or Starlink subscription. Exporters are also forced to surrender a portion of their foreign currency earnings at this rate. The result is an artificially low rate, currently hovering around ZWG 27 to US$1.

Then there is the parallel market rate (or black market rate), which is determined by supply and demand on the streets. This is the rate most people and small businesses use. It currently sits at around ZWG 32 to US$1. While this gap has narrowed from previous highs, it still exists. As we have previously discussed on Zimpricecheck.com, the government recently allowed businesses to set their own prices based on the rate they acquire foreign currency, which is a positive step towards convergence. However, a true convergence cannot happen as long as the formal market remains a restricted club. Until anyone can freely walk into a bank and exchange their ZiG for USD at a market-determined rate, a parallel market will persist, and the dream of a single exchange rate will remain just that—a dream.

The Crisis of Access: Where is the ZiG Cash?

Even if the exchange rate issue were magically resolved tomorrow, a far more practical problem stands in the way: you can barely find any physical ZiG. The government introduced the new currency in April 2024 to replace the worthless Zimbabwe Dollar (ZWL), but it has been extraordinarily timid about printing physical notes and coins.

Despite designs for denominations up to ZWG 200 being announced, the highest note currently in circulation is the ZWG 20. At the prevailing informal cash rate, this is worth a paltry US$0.50. You need at least two of these notes to buy a single loaf of bread. The vast informal sector, which accounts for a huge portion of Zimbabwe’s economic activity, is a cash-based economy. Right now, it runs almost entirely on United States dollar notes.

The government’s reluctance is understandable, stemming from two fears. Firstly, there is the ghost of 2008. Most adults have vivid, traumatic memories of the hyperinflationary era and the printing of trillion-dollar notes that could not even buy a bus ticket. Introducing a ZWG 500 or ZWG 1,000 note, while logical from a value perspective (a ZWG 1,000 note would be worth about US$25), would likely trigger widespread panic, being seen as a harbinger of hyperinflation’s return.

Secondly, there is the cost. It is expensive to design and mint currency. The government spent millions on the Bond Notes, only for the informal sector to ruthlessly demonetise them as soon as their value fell. The same is already happening with the ZiG. The ZWG 1, ZWG 2, and ZWG 5 notes and coins have all but disappeared from circulation as they are too unwieldy to use for any meaningful transaction. The government is wary of printing higher notes that could suffer the same fate. This has created a situation where the ZiG is derided as a “Harare currency,” as it has failed to gain any real traction in other major centres like Bulawayo and the Midlands. You cannot have a national mono-currency that does not physically exist in sufficient quantities for the nation to use.

The Elephant in the Room: The Trust Deficit

The biggest, most insurmountable hurdle is not technical or logistical; it is emotional and historical. The Zimbabwean government has a colossal trust problem. For over two decades, citizens have been subjected to disastrous policies, only to be told that the resulting economic chaos is the work of nameless “saboteurs” and Western enemies. There has been no accountability, no apology, and no acknowledgement of failure.

Citizens have had their savings and pensions wiped out multiple times by currency changes. The very introduction of the ZiG was a prime example of this disrespect. It was unleashed on the population with no warning or consultation. Bank accounts were frozen for a week, leaving people unable to transact and businesses in limbo. This is not how you build the confidence needed to ask people to abandon the safety of the US dollar.

With a scarcity of cash, a ZiG mono-currency would be overwhelmingly electronic. This hands the state an incredible amount of power over citizens’ finances. The government, through its Financial Intelligence Unit (FIU), has repeatedly demonstrated a willingness to freeze the bank accounts of individuals and businesses it deems “saboteurs” with little to no due process. Giving this same institution, which has acted with impunity, complete control over every single transaction in the country is a prospect that terrifies most economically active Zimbabweans.

The IMF’s checklist does not include “build goodwill” or “regain public trust.” Yet, in Zimbabwe, this is the single most important variable. Without trust, this entire project is doomed.

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Frequently Asked Questions (FAQ)

Q1: What does the IMF mean by making the ZiG a “fully national currency”?
A: This is diplomatic language that suggests the IMF supports the ZiG becoming the primary, and eventually sole, currency for all transactions in Zimbabwe, a system known as a mono-currency.

Q2: Why is there a difference between the official and parallel market exchange rates?
A: The official rate is kept artificially low because access to foreign currency in the formal banking system is heavily restricted by the government. The parallel (or black market) rate is determined by real-world supply and demand, as most people and businesses cannot access the official market.

Q3: Why are there not enough physical ZiG notes and coins in circulation?
A: The government is hesitant to print higher denomination notes for two main reasons: fear of causing public panic reminiscent of the 2008 hyperinflation era, and the high cost of printing notes that may quickly lose value and be rejected by the public, as has happened before.

Q4: What is the biggest obstacle to the ZiG becoming Zimbabwe’s only currency?
A: The profound lack of trust between the Zimbabwean people and the government. After decades of policy failures, wiped-out savings, and a lack of accountability, citizens are unwilling to grant the government absolute control over their financial lives by abandoning the stability of the US dollar.

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Conclusion: A Recipe for Disaster

The government’s desire for a mono-currency is understandable. It would restore full control over the nation’s monetary policy. Unfortunately for them, the majority of economically active Zimbabweans feel this is precisely why the switch must be resisted. The government has proven, time and again, that when granted absolute control, it will abuse it with little regard for the consequences.

Students of history will recall the 1990s when the IMF championed the Economic Structural Adjustment Programme (ESAP), a policy that had devastating effects on the local economy and social fabric. This new push for a ZiG mono-currency, without first addressing the foundational issues of trust, accessibility, and a truly free foreign exchange market, feels dangerously similar.

Forcing a ZiG mono-currency upon a population that does not trust the government and cannot even access the physical cash is not a sound economic strategy. It is an attempt to build a house on a foundation of sand, and it is a recipe for yet another Zimbabwean economic disaster. Before any such ambitions can be entertained, the government must undertake the long, difficult work of earning back the trust it has so thoroughly squandered.