Browsing: Inflation in Zimbabwe

gold-backed currency the ZiG
  • Zimbabwe is phasing out ZWL as it ushers a new gold-backed currency, ZiG, starting today, Monday, 8 April 2024.
  • The ZiG is anchored by 2.5 tonnes of gold in the central bank’s vault and a basket of foreign currencies held as reserves.
  • Zimbabwe’s new Central Bank Governor has announced sweeping reforms as the new currency enters everyday use.

Zimbabwe launched a new currency on Friday, 5 April 2024, called the Zimbabwe Gold or the ZiG. The launch of the new currency occurred during the announcement of the country’s latest Monetary Policy Statement (MPS) in an event presided over by newly appointed central bank governor John Mushayavanhu.

The MPS introduced measures and interventions to anchor the local currency and ensure exchange rate and price stability. The old currency, the ZWL, had depreciated to its lowest against the US dollar, roughly ZWL 32,000. It lost over 90 per cent of its …

Inflation in Zimbabwe: Zimbabwe two dollar banknote (Photo: Waldo Swiegers/Bloomberg)

Zimbabwe’s decades old inflation has been worsened by the Russia-Ukraine war. Inflation in Zimbabwe remains one of the highest globally and the only country in Southern Africa with headline inflation above 50 per cent.

Prior to the war, rising inflation in Zimbabwe, low foreign direct investments, unsustainable foreign debt levels and corruption were among a plethora of problems plaguing Zimbabwe’s economy.

Zimbabwe’s economic problems started surfacing in 1997 when the regime of the late Robert Mugabe paid unbudgeted pensions to veterans of the country’s 1970s liberation war, leading to a currency collapse. The situation got worse in 1999 when Zimbabwe sent its troops to fight in Democratic Republic of Congo civil war that also drew armies from Uganda, Rwanda and Angola. A violent land reform programme that displaced nearly 5,000 commercial farmers, precipitating the crisis. Disputed elections and human rights violations led to the country’s economic isolation, which has taken …

Zimbabwe is cracking down on individuals it terms illegal forex traders.

Banks provide working capital for the day to day running of the majority of corporate Zimbabwe. Most suppliers work on a 30 to 90-day credit facility where supermarkets get access to products and then pay for the merchandise later. With no line of credit, there has been a shock to the supply chain. A few days after the announcement, companies started issuing press statements stating their failure to honour pre-standing contracts. Within a week, certain products started disappearing from shelves.

Cooking oil, cornmeal, and sugar have vanished from supermarket shelves. A precedent that echoes the dreaded year 2008 when another policy inconsistency made supermarkets into ghost towns. Zimbabweans know the signs of a dying economy and remember how tough life became in 2008.…

zimbabwe flag

Zimbabwe’s Finance Minister Mthuli Ncube delivered an optimistic 2021 $426 billion worth national budget. The upcoming year’s budget under the theme: Building Resilience and Sustainable Economic Recovery, is meant to be a gateway for an economic revival in the struggling country. 

The budget allocated a sizable proportion of the funds towards the health and education sectors.  

Key Budget Highlights

  • Budget size $421.6 billion
  • Revenue collection projected at $390.8 billion
  • Public debt $1.9 million
  • The economy is expected to grow 7.4% in 2021 following a consecutive decline in the past two years.
  • Year on year inflation is projected to end the year 2021 at 9% 
  • Upward review of tax-free threshold on salaries and 2% transaction levy and bonus.
  • Foreign currency-denominated corporate tax payments.
  • Tightening of Informal sector tax (Presumptive tax) collections.

Economic Recovery 

The minister presented optimistic growth metrics. The budget projects an anticipated 7.4% economic growth trajectory following two