IH Securities commends Reserve Bank of Zimbabwe Monetary Policy

Tapiwanashe Mangwiro

STOCKBROKING firm, IH Securities, says the Reserve Bank of Zimbabwe (RBZ)’s 2025 mid-term monetary policy review demonstrates the central bank’s unwavering commitment to tight monetary management, which has kept inflation in check and strengthened confidence in the Zimbabwe Gold (ZiG) currency.

In its analysis of the mid-term policy review, the brokerage company said, “At 30 June 2025, broad money (M3) amounted to ZiG97,34 billion, with foreign currency deposits making up 72,4 percent of the total.

“Reserve money has grown from ZiG720 million at the inception of the ZiG in April 2024 to ZiG4,65 billion as of June 2025.

“Local currency growth averaged 2,7 percent per month in the first quarter, contained by the reinforcement of NNCD (non-negotiable certificates of deposit) requirements to manage overall reserve growth.”

The firm further noted that the RBZ’s Targeted Finance Facility has disbursed ZiG420 million so far this year, with manufacturing and agriculture receiving the largest allocations, 44,82 percent and 34,73 percent respectively.

“This is capital going directly into productive capacity,” the firm said.

IH Securities highlighted that monthly ZiG inflation was stable at low single digits 1,6 percent in July, up from 0,3 percent in June, with the increase largely driven by rental revisions.

Annual inflation stood at 95,8 percent in July, compared to 85,7 percent in April, a rise the brokerage attributed to the base effect from October 2024’s spike in monthly inflation.

“Food inflation has been relatively steady, though upward trends in fruit and vegetable prices are evident. Non-food inflation remains influenced by transport, housing, fuel and utilities,” the analysis noted.

IH also said that the review noted the country’s robust external position.

Foreign currency receipts grew by 23,1 percent year-on-year in the first half of 2025 to US$7,3 billion. Export earnings rose 25,7 percent to US$3,95 billion, led by a 38,6 percent surge in gold receipts to US$1,38 billion on the back of record global prices.

According to the central bank’s update, diaspora remittances climbed 8,4 percent to US$1,09 billion. However, NGO inflows dipped 1,1 percent to US$550,1 million, and inbound foreign investment fell sharply, down 55,7 percent to US$110 million, due to reduced aid from the US and global investors’ preference for safe havens.

Despite this, the current account is forecast to post a US$621,7 million surplus in 2025, up from US$501,2 million in 2024.

IH Securities said the RBZ’s half-year stock take confirmed the banking sector remained technically sound. Total assets were ZiG191,82 billion as of June 2025, with deposits at ZiG112,77 billion and loans and advances of ZiG67,51 billion.

The loan-to-deposit ratio eased to 56,01 percent from 58,83 percent in December 2024, while the non-performing loan ratio declined from 3,37 percent to 2,9 percent, comfortably below the 5 percent benchmark. Seventy-two percent of loans went into productive sectors, with manufacturing and agriculture together accounting for nearly 30 percent of the loan book.

Profitability fell from ZiG10,4 billion to ZiG5 billion due to fewer foreign exchange revaluation gains in a more stable currency environment. “Seventeen out of nineteen banking institutions remain above the minimum regulatory capital requirement,” the brokerage added.

IH Securities said that the RBZ had stuck to its tight monetary stance under Governor Dr John Mushayavanhu, consistent with his emphasis that inflation was fundamentally a monetary issue.

The stockbroker’s note welcomed the bank’s increased consultation with industry stakeholders, calling it a positive shift from the perception of limited engagement in previous years.

However, it cautioned that unresolved concerns around the export retention policy, particularly delays in the disbursement of the local currency portion to exporters, still need attention if confidence is to deepen.

Banker Raymond Madziva said the review’s findings reinforced confidence that the ZiG is maturing as a stable currency.