Vusumuzi Dube
Business Reporter
SUSTAINED foreign currency inflows have not only met the country’s external payment obligations but generated a sizeable surplus — averaging US$400 million per month — in the 14-month period running from January 2024 to February this year, according to Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mushayavanhu.
Foreign currency receipts have averaged US$1,1 billion per month during the period, while external payment obligations averaged US$784 million per month.
The buffer has provided the much-needed liquidity for businesses and households.
Banker Ms Tariro Chikomo said the surplus could help banks offer competitive terms to borrowers.
“When banks know that foreign currency obligations are met and exceeded, a potential easing of lending rates can stabilise, and we can offer more competitive terms to borrowers,” she said.
Confidence in ZiG
The central bank figures also indicated a moderation in growth of ZiG loans.
“ZiG loans have grown at an average of 1 percent per week since October 2024, compared to 6,9 percent during the period before 27 September, 2024,” said Dr Mushayavanhu.
As at March 2025, total ZiG loans stood at ZiG50,7 billion, of which 12 percent were local currency-denominated, while local currency deposits represented 15,9 percent of the total deposit base.
Dr Prosper Chitambara, a senior economist at the Zimbabwe Economic Research Institute, linked this moderation in credit growth to the healthy external surplus.
“With US$400 million extra each month, the central bank can afford to be selective in domestic credit creation. This ensures that lending is not merely chasing short-term profit but supporting sustainable ventures. The surplus underpins confidence in ZiG, enabling a responsible expansion of loans,” he said.
Economist Mrs Gladys Shumbambiri-Mutsopotsi said disciplined loan growth has a positive impact on the economy.
“The moderation in ZiG credit growth, aligned with the external surplus, signals that monetary authorities are balancing the need for credit with the imperative of exchange rate and price stability,” she said.
“Depositors and borrowers alike benefit when policy frameworks link external strength with domestic lending practices.”
The Reserve Bank believes it has been successful in stabilising money supply owing to a “tight monetary policy stance”.
“Monthly growth in the ZiG component of money supply has been stabilised, from peak levels of over 100 percent prior to the introduction of ZiG, to just under 1 percent by March 2025,” Dr Mushayavanhu added.
“These measures have succeeded in curtailing the pass-through effects of money supply to the exchange rate and inflation, contributing to a reduction in the illegal parallel exchange rate premium from over 100 percent to current levels below 20 percent . . . This has resulted in the current price and currency stability.”
Dr Mushayavanhu emphasised the critical role that foreign currency and gold reserves play in supporting the local currency.
“Since August 2024, the foreign currency reserves in the form of gold and foreign currency holdings continued to cover ZiG reserve money by more than three times, while also being sufficient to cover the entire ZiG deposit base in the banking sector,” he said.
The more than 100 percent coverage of the ZiG components of both base (reserve money) and broad money (bank deposits) gives the Reserve Bank enough leverage to intervene in the foreign exchange market to tame volatile conditions and guarantee sustained exchange rate stability.
“The Reserve Bank reaffirms its commitment to ‘walk the talk’ of consistent and prudent monetary policy management to sustain price, currency and financial stability,” he said.
“As such, the Reserve Bank will remain vigilant to any emerging domestic and external risks to inflation, while simultaneously putting in place appropriate measures to strike the delicate balance between stability and economic growth.”
Inflation expectations are expected to remain well anchored, with month-on-month inflation projected to average below 3 percent in 2025.
However, given the base effects largely caused by the spike in monthly inflation in October 2024, annual inflation is expected to start at relatively higher levels between April and September this year, the central bank said.
“Going forward, inflation is expected to significantly moderate to end the year 2025 at less than 30 percent, thus supporting the envisaged economic growth of 6 percent in GDP (gross domestic product) in 2025,” it added.
Sidumisile Mabena