Online Reporter
Michael Tome, Zimpapers Business Hub
THE 22 percent surge in Zimbabwe’s foreign currency receipts to US$6 billion in the first five months of 2025, as reported by the Reserve Bank of Zimbabwe (RBZ), puts the central bank in a commanding position to adequately defend the stability of the domestic currency, the Zimbabwe Gold (ZiG), analysts say.
Zimbabwe adopted the currency in April last year, replacing the inflation-weary Zimbabwe dollar with the structured currency, ZiG, backed by precious metals, including gold.
Significant forex reserves are a critical element of central banks’ local currency management toolkit.
Central banks can buy or sell their own currency, or adjust interest rates to influence the value of local currency. Additionally, central banks hold foreign exchange reserves, which they can use to stabilise the currency during times of volatility.
The stability of ZiG is a critical part of the Government’s medium-term plans to gradually increase the proportion of foreign currency in domestic currency.
Zimbabwe currently uses a multi-currency regime provisioned to run until 2030, after which conditions should be ideal to reintroduce a stable domestic monocurrency, the bedrock of sustainable development of any economy.
According to RBZ, the substantial growth in foreign currency receipts is attributable to two primary factors, namely strong global metal prices that have driven growth in exports and a marked increase in remittances from abroad.
Export earnings dominated the basket of the receipts, accounting for 55,9 percent of the total inflows in the period to May 2025, highlighting the significant role that exports play in driving Zimbabwe’s foreign exchange earnings.
Loans and credit facilities followed, contributing 18,4 percent to the foreign currency basket while diaspora remittances accounted for 15,4 percent of the total foreign currency receipts.
According to the RBZ, the country has maintained a steady inflow of foreign currency receipts, which has been sufficient to meet its external payment obligations.
Notably, the inflows have not only been able to meet the country’s external payment obligations but have also left a sizeable surplus.
The surplus has allowed Zimbabwe a buffer to build reserves backing the local currency and fund other strategic economic priorities.
Statistics from the banks’ first-half snapshot reveal that from January to May 2025, Zimbabwe’s foreign currency receipts averaged US$1,2 billion per month, significantly exceeding the country’s external payments, which averaged around US$821 million per month.
On the other hand, the surplus, which averaged US$378 million per month for the period under review, was crucial in supporting domestic transactions and contributing to the accumulation of foreign currency reserves.
Sufficient foreign currency reserves are essential for stabilising the currency, meeting future external obligations, and enhancing the country’s overall economic resilience.
“The country has continued to receive foreign currency enough to cover its external payment obligations, leaving a significant surplus. The country’s foreign currency receipts have continued to amount to US$6 billion during the months of 2025 compared to US$4,9 billion for the same period in 2024.
“Foreign currency receipts averaged US$1,2 billion per month against external payments of around US$821million per month from January to May 2025,” said Central Bank governor, Dr John Mushayavanhu.
The announcement is in line with the central bank’s commitment in the February 2025 Monetary Policy Statement to use communication as an effective tool for implementing monetary policy.
Economist Mr Godfrey Kanyenze said the rise in foreign-currency inflows to US$6 billion during the first five months of 2025 was extremely important for Zimbabwe’s economic health.
“These additional dollars help to rebuild our net international reserves, which in turn support confidence in domestic ZiG currency. Stronger mineral-export earnings reduce the Government’s reliance on volatile portfolio and concessional financing, giving the Reserve Bank greater scope to defend the local unit and manage liquidity.
“At the same time, higher remittances bolster household consumption and small-business activity, especially in rural and peri-urban areas where formal banking channels are thin.
Together, these inflows enhance macro-stability by containing inflationary pressures and strengthen livelihoods at the community level, underpinning both demand and trade activity across the country,” said Mr Kanyenze. University of Zimbabwe economist and lecturer, Professor Albert Makochekanwa, said he projected growth in foreign currency receipts in 2025 on the back of an expected strong growth in gold production.
“The mining sector is generally expecting gold exports to surpass the total of last year. So, I believe the country will earn more foreign currency compared to the previous year.
“If mineral prices remain buoyant and remittances continue on their current trajectory, I anticipate full-year foreign-currency receipts to grow extensively,” said Professor Makochekanwa.
Zimbabwe’s full-year foreign-currency receipts are projected to reach an estimated US$14 billion to US$15 billion in 2025. The projection is based on the expectation that key minerals, particularly platinum and lithium, will sustain year-on-year price gains of 20 to 25 percent, yielding around US$9 billion to US$10 billion from mineral exports.
Similarly, remittances are forecast to grow at an annualised rate of 15 to 18 percent, contributing roughly US$4 billion to 4,5 billion; and that other export sectors, such as agriculture and manufacturing, recover modestly to add about US$1 billion.
These developments come as Zimbabwe exported gold worth US$748 million from January to May 2025, which is 24 percent more than in the same period last year.
Zimbabwe’s strong performance on the external sector came as the central bank maintained a tight monetary policy stance in response to evolving developments and emerging risks to global growth prospects to maintain stability in the economy, during the second quarter.
Additionally, the bank continued to modernise its monetary policy framework by progressively transitioning to indirect instruments for open market operations (OMO), aiming to enhance the effectiveness of its policy interventions.
