Zimbabwe’s economy could reach 6% growth in 2025, according to the latest forecast by the International Monetary Fund (IMF), following the launch of the new gold-backed currency.

However, the IMF warned that President Emerson Mnangagwa’s government needs to strengthen its efforts to combat corruption.

Despite facing challenges like high consumer inflation and foreign currency issues, the IMF stated that Zimbabwe’s economy “continues showing resilience,” though growth is “expected to decelerate to about 2% in 2024” down from 5.3% last year. 

This comes as the country grapples with the severe impacts of an El Niño-induced drought, coupled with increased import costs that are further deteriorating its balance-of-payments situation, IOL reports.

In response to these challenges, the Reserve Bank of Zimbabwe (RBZ) introduced a new currency, the Zimbabwe Gold (ZiG), in April, as the value of the Zimbabwe Dollar had significantly declined.

As a result, the IMF noted that the ZiG currency had stabilised in value, providing significant economic relief and contributing to efforts to control inflation.

“The ZiG official exchange rate has so far remained stable, ending a bout of macroeconomic instability in the first 3 months of the year when the Zimbabwe Dollar depreciated by about 260%,” said Wojciech Maliszewski, leading an IMF team for a mission to Zimbabwe.

“Assuming that macro-stabilisation is sustained, cumulative inflation in the remainder of the year is projected at about 7%.”

The IMF has recommended further refinements to Zimbabwe’s policy framework, suggesting that overall pricing stability will be best achieved by stabilising the domestic currency.  

Despite this, Zimbabwe continues to use a basket of multiple currencies, with the US Dollar being the dominant unit of exchange.

Furthermore, the IMF stated that pricing and currency stability could be attained by controlling base money growth through “unremunerated Non-Negotiable Certificates of Deposits (NNCDs)” and “through indirect monetary instruments to increase the attractiveness of the new currency” in the long run.