Online Reporter
Michael Tome
Business Reporter
ZIMBABWE should maintain strict fiscal and monetary discipline and deepen structural reforms to ensure long-term economic stability and sustainable growth, economic experts have said.
The recommendations come as the authorities seek to consolidate recent gains in macroeconomic stability and strengthen confidence in the country’s economic policies and the Zimbabwe Gold (ZiG) currency.
According to policy proposals outlined by Africa Economic Development Strategies (AEDS) and financial sector stakeholders, fiscal discipline remains a critical pillar for maintaining stability.
The Government has been urged to adopt a zero-tolerance approach to quasi-fiscal activities, strengthen public financial management systems and strictly enforce transparent, cash-based budgeting practices.
These developments come as Zimbabwe’s year-on-year inflation fell to 4,1 percent in January 2026, the first single-digit figure since 1997, driven by the gold-backed ZiG unit and strict monetary policies. This marks a significant stability milestone after years of hyperinflation. The drop is attributed to the local currency, launched in April 2024 to curb volatility.
The authorities, including the Reserve Bank of Zimbabwe (RBZ), have instituted strict money supply controls.
While official figures show improvement, 80 to 85 percent of transactions are still conducted in the US dollar.
Analysts argue that avoiding off-budget spending and ensuring accountability in public finances will help contain the fiscal deficit, reduce inflationary pressures and improve investor confidence.
The recommendations also highlight the need for continued monetary discipline, with the RBZ encouraged to maintain a restrictive, data-driven monetary policy stance.
According to AEDS executive director Professor Gift Mugano, premature easing of monetary conditions could reverse recent progress in stabilising prices and exchange rate movements.
He recommended the use of market-based instruments for liquidity management, arguing that such measures would enhance policy effectiveness, improve transparency and predictability within the financial system.
“The authorities should maintain restrictive, data-driven policy until single-digit inflation is sustained,” he said. “This will be attained using market-based instruments for liquidity management.
“They must also push for zero tolerance on quasi-fiscal activities, strengthen public financial management systems and enforce cash-based and transparent budgeting.”
Prof Mugano indicated that structural reforms remain indispensable if Zimbabwe is to transition from stability to sustained economic growth.
He argued that while stabilisation policies can create a foundation for recovery, long-term growth ultimately depends on the economy’s ability to expand productive capacity, increase exports and attract investment.
He warned that without stronger productivity growth and improved competitiveness, economic stability may prove difficult to sustain over the long term.
Prof Mugano advocated for deeper reforms aimed at improving competitiveness, boosting productivity and strengthening supply-side responses across key sectors of the economy to improve the business environment, reduce production costs, enhance infrastructure development and increase efficiency in both public and private sector operations.
“The Government should also deepen reforms to boost competitiveness, productivity and supply responses to ensure growth-driven and sustainable stability,” he said.
Economic commentators noted that inflation control remains central to restoring purchasing power, encouraging savings and supporting long-term investment.
In addition to fiscal and monetary discipline, analysts identified confidence and transparency as crucial ingredients for economic recovery and growth.
The authorities have been urged to accelerate ongoing economic reforms and improve public disclosure regarding the reserves backing ZiG.
Economic analyst Mr Tony Chipanga recommended wider public engagement and regular perception surveys to gauge market sentiment and identify concerns affecting confidence among businesses, investors and consumers.
“Confidence is a critical economic variable,” he said.
“Sound policies alone are not enough if the public and markets do not trust them. Transparency and effective communication are essential in building credibility.”
Greater transparency on reserve accumulation, management and reporting is expected to strengthen public trust in the local currency and reduce speculation within financial markets.
As Zimbabwe pursues its economic transformation agenda, analysts believe a coordinated approach that combines fiscal prudence, monetary discipline, transparency and structural reforms will be essential to maintaining stability and unlocking broad-based economic growth.
The central bank has continuously indicated that its current monetary policy stance will continue to preserve exchange rate and macroeconomic stability while supporting the country’s economic growth outlook.
Speaking at a recent engagement, RBZ Deputy Governor Dr Innocent Matshe said the stability of ZiG had restored much-needed predictability in business planning and economic forecasting.
He said the bank’s policy measures will continue to anchor inflation and exchange rate expectations, thereby supporting the projected economic growth rate.
Dr Matshe noted that money supply growth is contained.
He said the central bank will continue to walk the talk by improving reserve levels to strengthen confidence in the local currency.
“The monetary policy stance will ensure continued exchange rate and price stability without compromising the envisaged economic growth prospects,” he said.
“The monetary policy measures are expected to anchor inflation and exchange rate expectations, and support the envisaged projected economic growth.”
The policy priorities are expected to shape discussions among policymakers, business leaders and development partners as the country seeks to strengthen economic resilience and create conditions for sustained investment, employment creation and rising living standards.
