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THE International Monetary Fund (IMF) has commended Zimbabwe for ending the practice of printing money to finance Government projects — known as quasi-fiscal operations — saying the move has significantly helped to contain inflation and stabilise the exchange rate.
IMF African Department Director, Mr Abebe Aemro Selassie, told journalists during the presentation of the new regional economic outlook for sub-Saharan Africa at the IMF-World Bank Annual Spring Meetings in Washington DC, United States, that the “diminished recourse” to the Reserve Bank of Zimbabwe’s financing window has been a key policy shift aiding progress towards restoring macroeconomic stability in an economy long plagued by hyperinflation and exchange rate volatility.
Mr Selassie further noted that Zimbabwe’s policies have contributed to solid economic performance, even in the absence of concessional financing that other countries in the region benefit from.
“Zimbabwe has faced considerable challenges in recent years… and one of the distinguishing factors has been its limited access to concessional financing, which has helped other countries cushion the impact of global shocks. Against this difficult backdrop, it is encouraging to see the country implementing sound policies.
“Recourse to central bank financing has declined significantly. It is important to sustain this trend, as repeated reliance on central bank funding has historically contributed to inflation, exchange rate volatility, and a challenging foreign exchange environment. We are encouraged by the Government’s recent actions, and believe this momentum must be maintained,” said Mr Selassie.
Presenting his first Monetary Policy Statement on April 5, 2024, shortly after his appointment as RBZ Governor, Dr John Mushayavanhu pledged to end the practice of printing money to fund Government expenditure.
“I don’t believe in quasi-fiscal activities; it’s not going to happen under my watch. My mandate, as outlined in the Reserve Bank Act, is very clear and I have no intention whatsoever of doing other people’s jobs. In that regard, we have removed all quasi-fiscal obligations that had been created — some not of our own making as the RBZ… but that is now in the past. We will not be engaging in any quasi-fiscal operations,” Dr Mushayavanhu affirmed.
He emphasised that his mandate, as defined by the RBZ Act, is strictly monetary policy, and he has no intention of encroaching on the responsibilities of other Government departments.
Essentially, he committed to focusing solely on the central bank’s core functions and refraining from printing money to finance projects that should ordinarily be funded through taxation or borrowing — a practice that has historically fuelled Zimbabwe’s hyperinflation and currency instability.
In its latest quarterly update on monetary, currency, and price developments, released last week, the central bank projected that inflation would remain low and stable, supported by a tight monetary policy stance.
“The central bank is operating well within its inflation target, with annual inflation expected to be below 20 percent by December 2025, in line with projected economic growth of 6 percent,” the bank stated.
It reported that ZiG monthly inflation averaged 0.5 percent between February and September 2025, and is forecast to remain below 3 percent for the remainder of the year. The exchange rate, as reflected by the interbank market, hovered around ZiG 26.76 per US dollar during the third quarter of 2025.
“The parallel market premium has also been narrowing towards convergence with the interbank rate, with the remaining gap attributed to the illegality premium and search costs associated with the risks of sourcing foreign currency through informal channels,” the RBZ said.
In its recent Article IV consultation, the IMF Executive Board formally acknowledged that the decisive cessation of quasi-fiscal operations and monetary financing was a key development enabling Zimbabwe to achieve a degree of macroeconomic stability and lower inflation.
The discontinuation of quasi-fiscal operations has also supported the stability of the Zimbabwe Gold (ZiG) currency. When the ZiG was launched, its official exchange rate stood at 13.56 ZiG per US dollar.
Since its introduction, the RBZ has actively promoted its use alongside the multi-currency system, and official data now shows a growing proportion of transactions being conducted in ZiG.
The ZiG is currently trading at approximately 26.71 per US dollar and has maintained a relatively stable trajectory since the central bank devalued the currency by 43 percent on 27 September 2024.
The IMF noted that the economic outlook for sub-Saharan Africa remains resilient despite a challenging external environment characterised by fluctuating commodity prices, tight borrowing conditions, and a deteriorating global trade and aid landscape.
Regional economic growth is projected to remain steady at 4.1 percent in 2025, with a modest uptick expected in 2026, supported by macroeconomic stabilisation and reform efforts in key economies. However, this resilience cannot be taken for granted.
Overlapping monetary, financial, external, and fiscal vulnerabilities persist across much of the region. To strengthen macroeconomic stability while continuing to fund essential development needs, the IMF urged countries to focus on domestic revenue mobilisation and enhanced debt management.
