The World Bank has cautioned Zimbabwe against moving too quickly to end the domestic use of the US dollar, warning that a premature shift to the Zimbabwe Gold...
The World Bank has cautioned Zimbabwe against moving too quickly to end the domestic use of the US dollar, warning that a premature shift to the Zimbabwe Gold (ZiG) as a sole currency could trigger capital flight and undermine recent economic stabilisation gains.
Zimbabwe has set 2030 as the deadline for phasing out the domestic use of foreign currencies and transitioning to a mono-currency system based on ZiG. The policy would make the locally issued currency the main currency for domestic transactions once the transition is completed.
In its latest assessment, the World Bank said the Government’s plan carried a risk of premature de-dollarisation if the shift was made before sufficient confidence had been established in the local currency.
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“The government’s goal of transitioning to a mono-currency ZiG system carries a risk of premature de-dollarisation,” the World Bank said.
The lender warned that forcing the transition before the credibility of the local currency is firmly established could trigger capital flight, widen premiums on the parallel foreign exchange market and reverse some of the stabilisation gains achieved in recent years.
“The pace and sequencing of any transition will be as important as the destination,” the World Bank said, highlighting the importance of how and when Zimbabwe implements its currency policy rather than simply focusing on the 2030 target.
The warning comes as Zimbabwe reports improvements in some macroeconomic indicators. In a separate report released on September 4, the World Bank said fiscal and monetary discipline had helped bring local-currency inflation into single digits in early 2026, the first time this had happened since 1997. The economy also recorded average real GDP growth of nearly 6 percent between 2021 and 2025.
The World Bank nevertheless said the recent stabilisation needs to translate into broader economic improvements, including better employment opportunities, stronger private-sector investment and higher household incomes. It noted that about 80 percent of Zimbabweans work in the informal sector, with median earnings of about US$130 a month.
The concerns over de-dollarisation are linked to Zimbabwe’s previous experience with currency instability. The Zimbabwean dollar was replaced by ZiG in April 2024 following repeated currency weakness and inflationary pressures. The ZiG was introduced as a bullion-backed currency as authorities sought to restore monetary stability.
The World Bank has previously highlighted the risks associated with parallel foreign exchange markets, noting that large differences between official and parallel exchange rates can contribute to inflation, discourage investment and encourage capital flight.
The latest World Bank report also points to an opportunity for Zimbabwe to improve its access to external financing as it works with multilateral creditors to address long-standing arrears and restructure its debt. The country has been largely excluded from international debt markets since its 1999 default.
France and the United Kingdom have recently agreed to co-chair a platform supporting Zimbabwe’s efforts to restructure billions of dollars owed to creditors. The World Bank said progress on debt resolution could help improve Zimbabwe’s external financing conditions.
The lender expects Zimbabwe’s economy to grow by about 5 percent this year, in line with the Government’s forecast, although it expects growth to slow in 2027 amid risks associated with El Niño.
The World Bank’s broader September report said Zimbabwe could achieve stronger growth if it accelerates structural reforms. It projects that the current policy course would produce average growth of about 4 percent through 2030, while faster reforms could raise real GDP by an additional 10.7 percent by 2030 and 26.9 percent by 2040 compared with the baseline.
The report identified macroeconomic stability and debt resolution, reliable infrastructure, a more predictable regulatory environment and increased private-sector investment as key areas requiring attention. It said addressing power shortages, improving trade facilitation and strengthening the business environment would be important for sustaining growth.
For Zimbabwe’s currency transition, the World Bank’s latest warning therefore focuses on confidence and timing. The lender has not rejected the idea of a local-currency system but has cautioned that the shift should take place only when economic conditions support sustained confidence in ZiG.
The 2030 deadline remains the Government’s stated target for ending domestic use of foreign currencies. However, the World Bank’s assessment places emphasis on establishing the credibility and stability of ZiG before forcing businesses and consumers to move away from the US dollar.
The currency debate is therefore likely to remain closely linked to inflation, exchange-rate stability, access to foreign currency, investor confidence and the Government’s wider economic reform programme as Zimbabwe moves towards its 2030 target.
