The International Monetary Fund (IMF) has voiced its backing for the full implementation of the Zimbabwe Gold (ZiG) currency, as the nation seeks to establish a staff-monitored program (SMP) that could pave the way for crucial debt relief and economic reforms.

IMF mission chief to Zimbabwe, Wojciech Maliszewski, said this week that while the ZiG has shown encouraging signs of stability since its launch in April 2024, additional measures are necessary to ensure its effective role as the country’s official currency.

Maliszewski is currently leading an IMF team in Harare to evaluate Zimbabwe’s economic progress and assess readiness for a potential SMP, Bulawayo 24 News reports.

“Right now, we see good stability in the official market and we also see a convergence between the parallel and official rate. Ideally, we would like to see an elimination of this gap - we would like to see one exchange rate,” Maliszewski commented.

The ZiG, launched as a replacement for the troubled Zimbabwean Dollar, marks the country’s sixth attempt at a stable currency since the original local Dollar collapsed in 2009.

Although backed by gold reserves and intended to rebuild trust in the monetary system, the ZiG has yet to win widespread public confidence. Many Zimbabweans continue to prefer using the US Dollar, citing concerns over the ZiG’s lack of convertibility and a recent 43% devaluation meant to reduce the gap between the official and parallel exchange rates.

Maliszewski stressed that the IMF is not calling for additional depreciation of the currency, but is instead urging for the implementation of policies that encourage exchange rate alignment through prudent fiscal practices and the expansion of the foreign exchange market.

“There is a good chance that these rates will converge. What we want to see is a market-based mechanism, not artificial price controls,” he said.

Successfully implementing an SMP is viewed as a key milestone for Zimbabwe to address its $21 billion external debt. Creditors are insisting on clear proof of fiscal discipline and monetary reforms before agreeing to any debt restructuring or arrears clearance.

Finance and Economic Development Minister Mthuli Ncube recently stated at the African Development Bank's annual meetings that the government aims to finalise the SMP by the end of June.

The IMF team is set to wrap up its current mission in the coming weeks, with its recommendations expected to influence Zimbabwe’s path toward economic normalisation.