Online Reporter
Tapiwanashe Mangwiro
Senior Business Reporter
THE gold boom, which has brought in billions of United States dollars in export earnings and helped the Reserve Bank of Zimbabwe build its bullion reserves, has created an inadvertent problem for Treasury: the high cost of incentivising small-scale miners to sell through formal channels.
In response, the Government has put a US$300 million ceiling on spending under the gold incentive scheme for 2026 and will announce whether the programme remains necessary and financially sustainable in the 2027 National Budget.
The development follows a sharp increase in payments to artisanal and small-scale miners, who have become increasingly important to Zimbabwe’s formal gold production.
The IMF said payments under the scheme reached US$118 million in the first quarter of this year and US$141 million by the end of April, against a 2026 annual budget allocation of only US$16 million.
That means the Treasury had already spent almost nine times the original annual allocation by April and the numbers provide a clear picture of how the scheme has effectively gone into fiscal overdraft.
Introduced in 2021 to encourage formal gold sales and reduce smuggling, the incentive is paid to eligible artisanal and small-scale miners and licensed gold-buying agents that meet prescribed delivery thresholds.
The problem is that the incentive is linked directly to the value of gold delivered.
The IMF explains that the scheme pays five percent, seven percent or nine percent, depending on delivery volumes.
In its assessment, the fund warned, “This ad valorem structure makes the fiscal cost open-ended and sensitive to gold prices and delivery volumes.”
When miners deliver more gold, the Government pays more. When the price of gold rises, the Government also pays more, even if the physical quantity delivered remains unchanged.
Zimbabwe has experienced both developments at the same time.
Gold prices have risen sharply over the past two years.
The metal averaged around US$2 386 an ounce in 2024, before climbing to about US$3 431 an ounce in 2025, according to international gold market data.
That represents an increase of about 44 percent in the average price within one year and the higher price has been a major boon for Zimbabwe.
The IMF says gold exports increased to US$1,3 billion in the first quarter of 2026, from US$800 million during the same period last year. At the same time, the country’s current account swung to a US$616,3 million surplus, from a US$22,6 million deficit in the first quarter of 2025.
For ordinary Zimbabweans, the benefit is less visible than the headline export numbers, but the gold boom matters because the foreign currency generated by mining strengthens the country’s external position.
It provides dollars for imports, supports the balance of payments and gives the central bank greater room to build reserves.
The RBZ has also significantly increased its gold holdings.
Gold reserves rose from about 1,5 tonnes in April 2024 to 3,4 tonnes by June 2025, more than doubling in just over a year. The build-up has continued as authorities seek to strengthen the reserve backing of the Zimbabwe Gold currency.
Economic analyst Mr Namatai Maeresera welcomed the rapid accumulation of gold reserves, saying:
“The critical element is governance, transparency and efficiency in converting those royalties into reserves.”
His warning is particularly relevant as the Government considers the future of the incentive scheme.
The reserve build-up shows that Zimbabwe is extracting more value from its gold resources, while the rising deliveries demonstrate that more of the metal is moving through formal channels.
However, the cost to the Treasury has risen at the same time.
The IMF says the incentive scheme may no longer need to be as generous because formal gold buyers are offering prices aligned with world prices, purchases are paying US dollars and there have been no payment delays.
In other words, the original reason for paying a large premium to miners may be weakening.
When the scheme was introduced, the Government needed to make formal channels sufficiently attractive to compete with gold smuggling.
Today, the international gold price itself is providing a powerful incentive and this creates an interesting policy dilemma. The Government needs small-scale miners to continue selling formally because those deliveries feed into export earnings, taxes and reserve accumulation.
At the same time, the Treasury cannot allow a mechanism designed to encourage formalisation to become an open-ended expenditure commitment.
The IMF has therefore welcomed the decision to impose a ceiling while reviewing the scheme.
The fund said, “Government should focus on assessing and better containing gold-delivery incentives as it seeks to preserve fiscal stability.”
The US$300 million ceiling is consequently less a rejection of the gold sector than an attempt to put a price on the success of the policy.
Bongani Ndlovu