EMBARGOED TILL DELIVERY

TABLE OF COTETS
SUMMARY OF STAKEHOLDER CONSULTATIONS ON MONETARY POLICY

TABLE OF FIGURES
Figure 6: Weekly Growth in ZiG (Left Hand Side) and USD Loans (Right Hand Side)
Figure 22: Digital Payments Transaction Values and Volumes from Jan - Jun 2025 .. 55
Figure 27 : Foreign Currency Reserve Cover of ZiG Reserve Money and Deposits ... 79

LIST OF TABLES

LIST OF BOXES
Box 7: Feedback on the conduct of Foreign Exchange Transactions in the Market .... 83
Box 8: Calculation of Banking Sector Foreign Currency Net Open Positions (NOPs) 84

SECTIO OE
ITRODUCTIO AD BACKGROUD

1.
This Mid-Term Monetary Policy Review Statement, which is issued in terms of
Section 46 of the Reserve Bank Act [Chapter 22:15] comes at a time when the
Reserve Bank has consistently “walked the talk and stayed the course” of durably
anchoring and fostering price, currency and exchange rate stability, since the
introduction of ZiG in April 2024. Accordingly, the Reserve Bank has continued
to ensure that money supply growth is consistent with targeted inflation and
envisaged economic growth. This policy thrust has supported sustained
disinflation without compromising economic growth prospects.

2.
The stable macroeconomic conditions have supported the strong recovery in
growth across all sectors of the economy. Notwithstanding the uncertain global
economic prospects, the economy is projected to grow by 6% in 2025, up from an
estimate of 1.7% for 2024. The strong growth rebound also benefited from the
recovery in the performance of the agricultural sector and the growth in the
mining, manufacturing and tourism sectors.

3.
The prevailing macroeconomic stability is evidenced by a relatively stable
ZiG/US$ exchange rate and prices, marked by limited volatility in the foreign
exchange market. As a result, the ZiG monthly inflation averaged 0.6% in the
period extending from February to July 2025. Reflecting the low month-on-month
inflation, annual ZiG inflation, which has been elevated since April 2025 on
account of the base effects, is expected to moderate significantly during the last
quarter of 2025 and is projected to end the year at around 30%.

4.
The ZiG/US$ exchange rate stability has been supported by sustained foreign
currency inflows, the greater interplay of market forces and increased flexibility
on the Willing-Buyer Willing-Seller (WBWS) foreign exchange market. During

the first six months to June 2025, foreign currency inflows, largely from export
earnings and international remittances, amounted to US$7.2 billion, up from
US$5.9 billion during the same period in 2024. The increased foreign currency
inflows facilitated the build-up of foreign currency reserves, enabling the Reserve
Bank to strategically intervene in the foreign exchange market to ensure market
clearing and engender greater exchange rate stability.

5.
Notably, foreign currency reserves have grown by over 150% from US$285
million in April 2024 to over US$730 million in June 2025. The Reserve Bank
will continue to accumulate foreign currency reserves to achieve the regional
benchmark of 3-6 months of import cover to support the sustained stability of the
local currency.

6.
The stable macroeconomic conditions have also resulted in increased usage of ZiG
in the economy. The proportion of ZiG in National Payment System electronic
transactions rose from 26% in April 2024 to over 40% in June 2025, reflecting
increased usage of ZiG. In addition, local currency cash usage in the economy has
increased. In this regard, the Reserve Bank continues to ensure the wider
availability of ZiG cash through the banking system.

7.
In order to ensure continued and prudent money supply management, the Reserve
Bank refined its open market operations through the recalibration of NonNegotiable Certificates of Deposit (NNCDs) in May 2025. In this regard, the
Reserve Bank tightened the NNCDs to a fixed term of 30 days and curtailed early
redemptions. The refinement is expected to ensure that the current monetary policy
thrust remains effective in consolidating and entrenching price and exchange rate
stability.

8.
The current stability was also acknowledged and commended by key economic
agents during stakeholder consultative meetings held from 7 to 14 July 2025 in

preparation for the 2025 Mid-Term Monetary Policy Statement. The stakeholders
emphasised the need for the Reserve Bank to remain consistent in the
implementation of prudent monetary policy and staying the course - “walking the
talk” - by consolidating and entrenching stability.

9.
Stakeholders welcomed the role being played by the Targeted Finance Facility
(TFF) in supporting the productive sectors and called for the Reserve Bank to
continue delicately balancing the need for stability and growth. Further, the
stakeholders acknowledged the increased use of the ZiG in the economy and
encouraged the Reserve Bank to continue ensuring the wider circulation of ZiG
cash. The stakeholders highlighted that clarity on the de-dollarisation roadmap is
critical to dispel misconceptions, enhance confidence, shape expectations and
support sustained use of ZiG in the economy.

10. Following the adoption of communication by the Reserve Bank as an integral
component of the monetary policy toolkit, insightful feedback has been received
from stakeholders through both formal channels and social media. This has
enriched the monetary policy debate and better informed monetary policy
formulation. Consequently, the feedback from stakeholders corroborated the
findings from the quarterly snapshot on recent monetary, currency, price and
financial developments, which the Reserve Bank has been publishing in the public
media for the wider audience.

11. Going forward, the Reserve Bank will continue to implement additional measures
to strengthen the monetary policy framework and improve the effectiveness of
monetary policy operations to consolidate price, currency and exchange rate
stability. Accordingly, this Statement evaluates the performance and effectiveness
of measures implemented since 5 April 2024 and reaffirms the monetary policy
stance to be pursued by the Reserve Bank in the next six-month period.

12. The subsequent sections of the Monetary Policy Statement are presented as
follows:
•
Section 2: Recent Economic Developments
•
Section 3: External Sector Developments
•
Section 4: Condition and Performance of the Banking Sector
•
Section 5: Monetary and Financial Conditions
•
Section 6: Monetary Policy Measures
•
Section 7: Economic Outlook
•
Section 8: Conclusion

SECTIO TWO
RECET ECOOMIC DEVELOPMETS

GLOBAL DEVELOPMETS
13. The global growth momentum has decelerated against the backdrop of headwinds
from diminished confidence, elevated debt levels, climate shocks, and heightened
policy uncertainty compounded by ongoing geopolitical and trade tensions. The
slowdown in global growth has been broad-based, characterised by divergent
regional growth trajectories and the slower pace of disinflation, following the nearuniversal tariffs imposed by the USA. Moreover, retaliatory measures from the
USA’s major trading partners constrained trade and investment. Against this
background, the IMF’s July 2025 World Economic Outlook (WEO) Update,
projects global growth to moderate from 3.3% in 2024 to 3.0% in 2025, as shown
in Figure 1.

Figure 1: Real Gross Domestic Product (GDP)
* Projections
Source: IMF World Economic Outlook Update, July 2025
14. Looking ahead, medium-term growth is projected to remain at levels below the
pre-pandemic historical average of 3.8%. The subdued growth outlook could


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worsen poverty and delay income convergence between Emerging Market and
Developing Economies (EMDEs) and advanced economies. Furthermore,
declining foreign direct investment and foreign aid cuts could undermine job
creation and poverty alleviation efforts, particularly in EMDEs.

15. The global growth outlook remains subject to significant downside risks from
escalating protectionism, slowdown in global trade, policy uncertainty, a rebound
in effective tariff rates, the impact of climate-related shocks, geo-economic
fragmentation, intensified conflicts, and population ageing. Despite the significant
risks dominating the outlook, global growth is forecasted to improve modestly to
3.1% in 2026 but remains subject to evolving trade policy changes and their
differential effects across countries.

16. In advanced economies, growth is projected to slowdown from 1.8% in 2024 to
1.5% in 2025, before rebounding marginally to 1.6% in 2026. The decline in
growth in 2025 is underpinned by the deceleration of activity in the US which is
projected to decline from 2.8% in 2024 to 1.9% in 2025. The decline in US growth
in 2025 largely reflects the dampening effects of import tariffs on aggregate
demand. Further, increased policy uncertainty has weakened business and
consumer sentiment in the US, reflecting the potential impact of trade tensions on
global growth. Neverthelss, the near-term boost to growth is expected from
President Trump’s One Big Beautiful Bill Act (OBBBA) to be implemented
primarily through tax incentives for corporate investment.

17. In the Euro-area (EA), growth is projected to firm up from 0.9% in 2024 to 1.0%
in 2025, and 1.2% in 2026. Growth performance in the EA is expected to recover
notwithstanding the policy uncertainties from the US tariffs on EU imports and
their initial dampening effects on consumer demand and investor sentiment. The
offsetting effects of firming real wages and consumption occasioned by declining
inflation, alongside accommodative fiscal conditions in Germany, spurred the

modest growth recovery in the Euro-area. In parallel, the strong first quarter GDP
outturn in Ireland, driven by large pharmaceutical exports to the US, enhanced
growth performance in Europe.

18. In EMDEs, growth is projected to decline from 4.3% in 2024 to 4.1% in 2025 and
4.0% in 2026. The slowdown in EMDEs is underpinned by significant growth
downgrades for Emerging and Developing Asia, following the imposition of US
trade tariffs in April 2024, and the challenging external environment.

19. Growth in China is projected to moderate from 5.0% in 2024 to 4.8% in 2025 and
4.0% in 2026 as US tariff measures weigh on growth performance. Nonetheless,
stronger -than-anticipated growth in the first half of 2025, benefitting from lower
US-China effective tariffs resulted in growth upgrades for China. At the same
time, accommodative fiscal and monetary policy measures and the strong
carryover from 2024 will further shore-up economic activity in 2025. Going
forward, recovery in the Chinese economy remains contingent on tackling of
attendant property market challenges. In India, growth is expected to remain strong
at 6.4% in 2025 and 2026, underpinned by robust private consumption,
particularly in rural communities.

20. In Sub-Saharan Africa (SSA), growth is projected to remain subdued at 4.0% in
2024 and 2025 as the disruptive effects of the recent trade policy shifts dampened
the post-pandemic recovery momentum. More specifically, heightened global
policy uncertainty and weakening investor sentiment have weighed on growth
performance in South Africa, while low oil prices will hold back faster growth in
Nigeria. Meanwhile, delays in the resumption of oil exports in South Sudan, will
negatively impact on growth recovery in 2025. More broadly, changes in the
global trade regime will have a strong bearing on global growth and the recovery
in SSA through depressed commodity prices.

21. The shift in global policy priorities and the disproportionate impact of US trade
tariffs on SSA’s smallest and vulnerable countries has also generated renewed
concerns. At the same time, elevated borrowing costs for EMDEs will compound
debt dynamics, amplify the risk of capital flow reversals, and generate renewed
currency and inflationary pressures. More importantly, foreign aid cuts will affect
critical social and development initiatives with pronounced repercussions on the
most vulnerable.

Global Inflation Developments

22. Global inflation is anticipated to decline in 2025 albeit at a slower pace than
initially anticipated, owing to the impact of tariffs and the disruption of global
value chains. The countries most affected by tariffs face higher import costs,
productivity losses and a decline in domestic and external demand. Moreover,
inflation expectations have surpassed central bank targets in major advanced and
emerging market economies and renewed inflationary pressures from firming
input prices, remain concerning. The retreat in commodity prices alongside
cooling demand is, however, expected to moderate the incipient inflationary
pressures. Accordingly, global inflation is projected to decline from 5.7% in 2024
to 4.2% and 3.6% in 2025 and 2026, respectively.

23. In advanced economies, inflation is forecasted to decline in 2026 and draw closer
to the target. The progressive decline in inflation may signal the normalization of
monetary policy in advanced economies. Similarly, in the Euro-area (EA) the
disinflation process remains well on-track towards the medium-term target of 2%.
The decline in EA inflation also benefitted from receding energy prices, declining
services inflation and adjustment measures to enhance fiscal and debt
sustainability. Additionally, incipient price pressures are likely to be countered by
weaker demand, softer commodity prices and the diversion of trade to China.

24. Inflation in the USA is projected at 3.0% and 2.5% in 2025 and 2026, amidst
renewed pressures from the pass through from tariffs and a weaker dollar to
sensitive consumer products and the cost of intermediate goods. Nevertheless, the
aggressive fiscal tightening designed to rationalize spending and cut official
development assistance is expected to moderate inflationary pressures in the US.

25. Inflation in Sub-Saharan Africa is projected to remain elevated at 13.3% in 2025
against the backdrop of global policy uncertainties and sizeable fiscal deficits
exacerbated by high debt repayments. Going forward, inflation is expected to
moderate to 12.9% in 2026 on the back of anticipated improvements in the global
economic outlook, which is envisaged to support demand for Africa’s exports and
moderate exchange rate and inflationary pressures. Figure 2 shows trends in global
inflation.

Figure 2: Global Inflation Developments
Source: IMF World Economic Outlook Update, July 2025

26. Despite the notable progress on the disinflation path, significant inflation risks
dominate the outlook. Specifically, strong headwinds from increased policy
uncertainties, escalation of trade tensions, rising protectionism, and foreign aid
cuts could undermine progress made on the disinflation front, including in
EMDEs.
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Commodity Price Developments

27. International commodity prices are anticipated to decline in 2025 and 2026 amid
low demand due to the moderation in global growth occasioned by rising trade
tensions and tighter global financial conditions. Consequently, prices for energy,
food, agricultural commodities, base metals and minerals are generally projected
to remain subdued in 2025 and 2026, largely as a result of slackening demand.
Gold prices, however, remain elevated on account of the strong safe-haven
demand.

28. The outlook for commodity prices, however, remains closely linked to the
expeditious resolution of trade tensions. Table 1 shows selected commodity price
developments in 2023 and 2024 as well as forecasts up to 2026.
Table 1: International Commodity Price Developments

Commodity
Actual

Actual

Forecast

Forecast

Energy


Crude Oil, brent (US$/bbl)
82.6
80.7

Coal Australia (US$/mt)
172.8
136.1

atural Gas, Europe (US$/mmbtu)

Food


Soya bean oil (US$/mt)
1,119
1,022

Maize (US$/mt)

Rice, Thailand (US$/mt)

Wheat (US$/mt)

Agricultural Commodities


Cotton (US$/kg)

Tobacco (US$/mt)

Base Metals and Minerals


ickel (US$/mt)

Copper (US$/mt)

Iron ore (US$/dmt)
120.6
109.4

Precious Metals


Gold US$/toz

Platinum US$/toz

1,050
1,075
Source: World Bank Commodity Market Outlook, April 2025

DOMESTIC ECOOMIC DEVELOPMETS

Real Sector Developments

29. Domestic economic activity improved in the first half of 2025 mainly driven by
strong performance in the agriculture and mining sectors. As such, growth is
projected to rebound from 1.7% in 2024, to 6% in 2025. The agriculture sector
recovered strongly in 2025 with improved production across all crops. Tobacco
output has surpassed the historical record with deliveries topping 351 million kgs
as at 31 July 2025. Similarly, the mining sector has been bullish, driven by gold
deliveries which rose to 20.1 tonnes as at end June 2025, up from 13.85 tonnes,
during the same period in 2024.

30. Overall, the economy has benefited immensely from the improved
macroeconomic stability during the first half of 2025.

Monetary Developments

31. The local currency component of reserve money growth averaged 2.7% per month
during the first quarter of 2025. Reserve money growth, however, rose to 13.9%
in April 2025. To curtail reserve money growth, the Reserve Bank tightened the
terms of NNCDs and enhanced their effectiveness in liquidity management.
Following the tightening of NNCDs, reserve money growth has since moderated
to 9.2% in May 2025, before declining significantly to -1.3% in June 2025.

32. Figure 3 shows monthly developments in reserve money.

Figure 3: Reserve Money (M0) Developments

Source: Reserve Bank of Zimbabwe, 2025

33. Money supply growth has largely been consistent with exchange rate and inflation
developments. The prudent monetary policy stance resulted in the dissipation of
inflationary pressures during the first half of 2025.

34. Total broad money stood at ZiG97.34 billion in June 2025, an increase of 16.14%,
from ZiG78.91 billion recorded in December 2024. The growth in total broad
money largely reflected an expansion of 18.85% in foreign currency deposits from
ZiG 59.29 billion in December 2024, to ZiG 70.47 billion in June 2025. Figure 4
shows the composition of total broad money supply.


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Figure 4: Composition of Money Supply
Source: Reserve Bank of Zimbabwe, 2025

35. Foreign currency transferable deposits continued to dominate total broad money
accounting for 72.40%, while local currency transferable deposits constituted
14.45%.

36. In line with reserve money developments, month-on-month growth in local
currency broad money averaged just below 1% in first quarter of 2025 and rose to
4.4% and 11.7% in April and May of 2025, respectively. Reflecting the decline in
reserve money in June 2025, ZiG broad money growth decreased to -0.81% as
depicted in Figure 5.


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Local Currency
Time Deposits,
1.55%
FX Time Deposits, 9.93%
Local Currency
Transferable , 14.45%
FX Transferable
Deposits, 72.40%
Currency in Circulation,
0.13%

Figure 5: Broad Money (M3) Developments

Source: Reserve Bank of Zimbabwe, 2025

Credit to the Private Sector

37. Banking sector month-on-month credit growth to the private sector averaged
3.6% over the first 6 months of 2025. The developments in weekly loans for
both local and foreign currency are shown in Figure 6.
Figure 6: Weekly Growth in ZiG Loans (Left Hand Side) and USD
Loans (Right Hand Side)

Source: Reserve Bank of Zimbabwe, 2025

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38. At an average credit growth of 3.6% per month, the annualised nominal credit
growth comes to around 52% and real credit growth will be around 17%, assuming
annual target inflation of 30%. This shows that the current credit growth is
consistent with the envisaged economic growth of 6%. In this regard, the economy
should be able to achieve the targeted economic growth for 2025, underpinned by
higher-than-expected agricultural output (tobacco) and mining (gold).

Zimbabwe Stock Exchange Developments

39. The Zimbabwe Stock Exchange (ZSE) exhibited bearish sentiments during the
first half of 2025, reflecting continued market correction following the tightening
of monetary policy during the fourth quarter of 2024. In this regard, the All Share,
Top 10, and Top 15 indices declined to close at 197.23 points, 194.14 points and
197.63 points, respectively. Similarly, the resource index declined from 235.38
points as at end December 2024, to close at 145.40 points.

40. Figure 7 shows the developments of the ZSE indices for the period 30 December
2024 to 30 June 2025.

Figure 7: All Share, Top 10 and Mining Indices


Source: Zimbabwe Stock Exchange, 2025
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41. In line with developments on the local bourse, market capitalisation declined from
ZiG 66.2 billion in December 2024 to ZiG60.97 billion as at June 2025.

Victoria Falls Stock Exchange (VFEX) Developments
42. The VFEX traded on a negative trajectory during the second quarter of 2025. As
a result, the VFEX All Share index lost 2.82% to close at 107.21 points, from
110.32 points recorded in the quarter ending March 2025. On an annual basis, the
VFEX All Share index gained 3.35%, from 103.73 points recorded in June 2024.

IFLATIO DEVELOPMETS

Monthly ZiG Inflation
43. Month-on-month ZiG inflation has remained low, ranging between -0.1% and
0.9% during the first half of 2025, benefiting from tight monetary conditions that
also helped stabilise the ZiG/US$ exchange rate. Monthly ZiG inflation stood at
1.6% in July 2025, driven by a increase in the rental subcategory and seasonal
increases in the price of fruit. Figure 8 shows the developments in monthly
inflation.

Figure 8: ZiG Monthly Inflation Profile (%)

Source: ZIMSTAT, 2025


May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
Jan-25
Feb-25
Mar-25
Apr-25
May-25
Jun-25
Jul-25
ZiG Headline Inflation
Food Inflation
Non food Inflation

44. Monthly food inflation stood at 0.2% in July 2025, an increase from -0.2% in June
2025 driven by increases in fruits and vegetables food categories.

45. Non-food inflation, increased to 2.3% in July 2025, from 0.53% in June 2025,
mainly driven by increases in rentals, housing, water, electricity, gas and other
fuels and transport categories. Box 1 highlights recent inflation developments and
drivers.

Annual ZiG Inflation
46. The annual ZiG inflation was recorded at 95.8% in July 2025, up from 85.7% in
April 2025. The elevated year-on-year inflation largely reflects the base effect
(Box 2), emanating from the once-off spike in month-on-month inflation in
October 2024. Going forward, the current trend in annual inflation is expected to
dissipate from October 2025 and align with the current low and stable monthly
inflation. Figure 9 shows annual inflation developments since April 2025.

Figure 9: Annual ZiG Inflation Developments 2025

Source: ZIMSTAT, 2025

Apr-25
May-25
Jun-25
Jul-25
%

Inflation measures the sustained increase in the general price level in the economy based on a basket
of goods and services. The Zimbabwe National Statistics Agency (ZIMSTAT) measures inflation
using the consumer price index (CPI) comprised of a basket of 495 products. The 495 products are
classified into twelve broad categories as follows: Food and non-alcoholic beverages; Alcoholic
beverages and tobacco; Clothing and Footwear; Housing Water Electricity Gas and Other Fuels;
Furniture, Household Equipment and Maintenance; Health; Transport; Communication; Recreation
and Culture; Education; Restaurants and Hotels; and Miscellaneous Goods and Services. The
categories for CPI are standardised across all countries in the world enabling the comparison of
inflation across jurisdictions. The number of products in the basket, however, may differ from country
to country as well as the weights for the specific categories.
ZIMSTAT collects the prices of all the commodities in the basket in shops across all districts of
Zimbabwe for ZiG and US dollars to produce the respective consumer price indices, normally between
the 11th and 17th of each month. The change in the price level between two consecutive months is
referred to monthly or month-on-month inflation. While annual inflation is normally used to gauge
the price movements over time, monthly inflation is critical to understand the current inflationary
pressures and dynamics in the economy. Accordingly, to understand inflation dynamics, including the
key drivers, central banks assess inflation developments in terms of the dynamics exhibited by prices
of the sub-categories. The threat to price stability is considered high when monthly inflation is broadbased and driven by increases across most categories or products. On the other hand, when monthly
inflation increase is observed in few categories, it can be assessed to be transitory and less of a threat
to price stability.
Month-on-month ZiG inflation has been generally stable, averaging 0.6% from February to July 2025.
In July 2025, month-on-month inflation, however, increased to 1.6%, up from 0.3% in June 2025,
which was above the observed monthly average from February to July 2025. An analysis of the July
CPI numbers, shows that monthly inflation was mainly driven by increases in rentals. Precisely, all
CPI categories increased by an average of 0.3%, while rentals increased by 8.5% month-on-month,
thereby driving up the overall monthly inflation for July 2025.
Rental prices in the CPI basket are measured and updated quarterly through the ZIMSTAT Quarterly
Housing Survey, which is conducted at the end of each quarter. The price rental changes observed in
the Survey are effected in the first month of the next quarter. Given that the Survey takes into account
the three months price rental changes, there are likely to be growth spurts observed in the rental CPI
each quarter. The Figure below shows monthly inflation by category.


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Monthly inflation by Category July 2025 (%)
Source: ZIMSTAT, 2025

Given the huge price increase in rental category as shown in the figure above, rentals contributed about 1.37
percentage points and all other items contributed only 0.23 percentage points to the 1.6% July 2025 monthly
inflation. The Figure below shows the dynamics of monthly inflation.


In this context, the Reserve Bank’s assessment is that the ZiG monthly inflation in July 2025 was not broadbased as the greater part was driven by rentals. As such, barring any unforeseeable and emerging risks to
exchange rate and inflation in the outlook period to December 2025, monthly ZiG inflation is expected to
revert to the observed averages between February and June 2025, supporting the envisaged annual inflation
year-end target of less than 30%.
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Source: ZMSTAT, 2025
Monthly Inflation Contributions February to July 2025 (%)

SECTIO THREE
EXTERAL SECTOR DEVELOPMETS

Foreign Currency Receipts
47. Total foreign currency receipts for the period January to June 2025 amounted to
US$7.3 billion compared to US$5.9 billion received during the same period in
2024 representing a 23.1% increase. Table 2 shows a comparison of total receipts
for 2025 and 2024.

Table 2: Foreign Currency Receipts (US$ millions)
Type of Receipt
JanJune

%
Contribution
JanJune

%
Contribution
%
Change
Export
Proceeds


International
Remittances
Diaspora
Remittances

NGOs

Loan
Proceeds
(Private)


Income
receipts


Foreign
Investment


TOTAL


Source: Reserve Bank of Zimbabwe
48. Export earnings contributed 54.5% of the country’s total receipts for the period
January to June 2025, while international money transfers accounted for about
22.7%. Export proceeds continue to anchor foreign currency receipts for the
economy from which the majority of foreign payments are being met. At the same
time, money transfer receipts have maintained the upward trend reflecting
confidence in the formal money transfer system.

49. Table 3 shows export earnings by sector as at 30 June 2025.

Table 3: Exports Earnings January to June 2025
Sector

% Change
Mining
2,807.00
2,025.40
38.60%
Gold
1,384.80
878.5
57.60%
Platinum
797.2
638.5
24.90%
Lithium Ore
214.6
215.8
-0.60%
Chrome ore +
Ferrochrome
149.6
150.2
-0.40%
Diamonds
134.86
43.13
212.70%
Coke
89.4
57.3
55.90%
Iron & Steel
13.13
0.06
-
Other minerals
22.6
21.6
4.63%
Tobacco
783.7
741.8
5.60%
Tourism
92.6
69.2
33.80%
Transport
90.8
82.9
9.50%
Manufacturing
90.7
119.9
-24.40%
Agriculture
47.7
73.9
-35.50%
Horticulture
17.1
14.1
21.30%
Other Services
(Construction, etc)
12.2
9.3
31.20%
Postal &
Telecommunications

6.8
17.60%
Total
3,949.80
3,143.30
25.70%
Source: Reserve Bank of Zimbabwe, 2025

Current Account Developments
50. The improvement in foreign currency receipts has positively impacted the
country’s current account position. Preliminary estimates indicate that the
country’s current account balance remained in surplus in the first quarter of 2025,
albeit at a reduced level. The surplus was sustained by resilient personal transfers
and strong export performance, particularly in the gold sub-sector.

51. The current account surplus was, however, partially offset by deficits registered in
the trade, services and primary income accounts. Figure 10 shows developments
in the current account.

Figure 10: Current Account Developments (US$ million)
Source: RBZ and Zimstat Estimates, 2025


Foreign Currency Payments
52. During the first half of 2025, Authorized Dealers reported foreign payments
amounting to US$5.0 billion, a 17% increase from US$4.3 billion reported during
the same period in 2024.


2024Q1
2024Q2
2024Q3
2024Q4
2025Q1
Trade Bal
Services Bal
Bal on Primary Income
Bal on secondary Income
Current Account Bal

53. The trade account constitutes 82% of total foreign payments made during the
period ending 30 June 2025. Notably, 39% (US$1,941.4 million) of payments
went towards importation of raw materials and capital goods as shown in Table 4.

Table 4: Foreign Payments by Category
Category
Jan - Jun
2025 (USD)
Jan – Jun
2024 (USD)
%
Variance
Contribution

Contribution

Merchandise Imports
(excl. energy)

- Raw Materials &
Intermediate Goods

- Capital Goods

- Consumption &
Manufactured Goods

Energy (Fuel &
Electricity)

- Fuel

- Electricity

Service Payments

- Technical,
Professional &
consultancy

- Software

- Other (tourism,
edu., freight etc)

Income Payments
(Profits, Dividends)

- Dividends

- Interest Payments

- Other (Salaries,
Expats, Rental)

Capital Remittances
(Outward)

- External Loan
Repayments

- Disinvestments


Category
Jan - Jun
2025 (USD)
Jan – Jun
2024 (USD)
%
Variance
Contribution

Contribution

- Foreign Investment

Other Payments

- Card Payments

- Refunds

Total

Source: Reserve Bank of Zimbabwe, 2025

SECTIO FOUR
CODITIO AD PERFORMACE OF THE BAKIG SECTOR

54. On aggregate, the banking sector remains safe and sound as reflected by the
satisfactory key financial soundness indicators. There are, however, some issues
of prudential concern at a few institutions and the Reserve Bank is instituting
appropriate and proportionate supervisory action in terms of the Banking Act
[Chapter 24:20] and the Microfinance Act [Chapter 24:30].

Banking Sector Architecture
55. Table 5 shows the banking sector architecture as at 30 June 2025.
Table 5: Banking Sector Architecture
Type of Institution
umber
Commercial Banks

Building Societies

Savings Bank (POSB)

Total Banking Institutions

on-Bank Financial Institutions Under the Supervision of Reserve Bank
Credit-only-MFIs

Deposit-taking MFIs
9*
Development Financial Institutions (SMEDCO, IDBZ, IDCZ and AFC Land &
Development Bank)

Total on - Bank’s Financial Institutions

Total umber of Institutions

*Includes Cashbox Financial Services Microbank Limited which is licenced but not operational.
Source: Reserve Bank of Zimbabwe, 2025


56. A total of 26 credit-only microfinance institutions were registered during the
period from January to June 2025.

BAKIG SECTOR DEVELOPMETS

Financial Soundness Indicators
57. As at 30 June 2025, the condition and performance of the banking sector was
satisfactory as reflected by the key financial soundness indicators depicted in
Table 6.

Table 6: Financial Soundness Indicators
Key Indicators
Benchmark
Jun-24
Sept-24
Dec-24
Mar-25
June-25
Total Assets
(ZiG Billion)

Total Loans & Advances
(ZiG Billion)

Net Capital Base
(ZiG Billion)

Core Capital
(ZiG Billion)

Total Deposits
(ZiG Billion)

Net Profit
(ZiG Billion)

Return on Assets (%)

Return on Equity (%)

Capital Adequacy Ratio
(%)


Tier 1 Ratio (%)


Loans to Deposits Ratio
(excluding lines of
credit) (%)

NPLs Ratio (%)


Liquidity Ratio (%)


Source: Reserve Bank of Zimbabwe, 2025

Banking Sector Capitalization
58. During the period under review, 17 out of 19 banking institutions reported core
capital above the minimum regulatory capital requirements, as shown in Table 7.
Table 7: Reported Core Capital as at 30 June 2025
o.
Banking Institution
Reported Core
Capital (ZiG)
US$ Equivalent
(US$1: ZiG26.9457)
Minimum
Regulatory
Capital (US$)

CBZ Bank
5,740,961,066.41
213,056,668.28
US$30 million

Stanbic Bank Zimbabwe
4,167,917,335.52
154,678,384.14
US$30 million

Ecobank Zimbabwe
3,366,964,539.47
124,953,686.10
US$30 million

CABS
3,199,303,609.95
118,731,508.55
US$30 million

o.
Banking Institution
Reported Core
Capital (ZiG)
US$ Equivalent
(US$1: ZiG26.9457)
Minimum
Regulatory
Capital (US$)

ZB Bank
2,646,567,460.68
98,218,545.47
US$30 million

NMB Bank
1,726,233,551.63
64,063,414.63
US$30 million

FBC Bank
1,516,155,943.96
56,267,083.21
US$30 million

First Capital Bank
1,511,638,952.90
56,099,450.11
US$30 million

Nedbank Zimbabwe
1,259,349,463.59
46,736,565.15
US$30 million

Metbank Limited
1,244,343,725.00
46,179,677.00
US$30 million

BancABC
1,109,179,532.50
41,163,507.81
US$30 million

National Building Society
1,085,448,357.94
40,282,804.23
US$30 million

FBC Crown Bank
921,321,380.63
34,191,777.56
US$30 million

AFC Commercial Bank
906,428,697.42
33,639,085.18
US$30 million

TN Cybertech Bank
887,071,222.56
32,920,696.90
US$30 million

POSB
858,955,687.27
31,877,282.36
US$20 million*

FBC Building Society
687,505,502.39
25,514,479.21
US$20 million

ZB Building Society
139,030,839.88
5,159,667.03
US$20 million
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Source: Reserve Bank of Zimbabwe, 2025

59. Time Bank, registered as a commercial bank and with reported core capital of
equivalent to US$3.8 million as at 30 June 2025, was authorised to re-commence
limited commercial banking activities (without taking deposits) in August 2022.
The banking institution is not authorised to take deposits.

60. ZB Building Society resolved to surrender its operating licence, and processes are
currently underway to address outstanding administrative and regulatory issues.


Banking Sector Asset Structure
61. During the period under review, total banking sector assets increased from
ZiG161.4 billion as at 31 December 2024 to ZiG191.8 billion as at 30 June 2025.

62. Figure 11 shows the asset mix which remained skewed towards loans & advances,
which accounted for 32.9% of total banking sector assets as at 30 June 2025 [Dec
2024: 31.3%].

Figure 11: Asset Mix as at 30 June 2025

Source: Reserve Bank of Zimbabwe, 2025


Banking Sector Loans and Advances
63. Aggregate banking sector loans and advances amounted to ZiG67.5 billion as at
30 June 2025, compared to ZiG55.9 billion as at 31 December 2024. Foreign
currency denominated loans accounted for 88.4% of the banking sector aggregate
loans.

64. The country’s key productive sectors continue to benefit from the intermediary
role of banks and they secured 72.0% of total loans as at 30 June 2025, as shown
in the Figure 12. Specifically, agriculture, manufacturing and distribution sectors
accounted for 16.8%, 12.2% and 10.9% of total loans, respectively.


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Source: Reserve Bank of Zimbabwe, 2025

Asset Quality
65. As at 30 June 2025, the banking sector reported an aggregate non-performing loan
to total loans ratio (NPL) of 2.9% compared to 3.4% as at 31 December 2024. The
quality of the banking sector’s loan portfolio remains satisfactory, and the NPL
ratio is within the internationally acceptable benchmark of 5%.

66. The trend in the level of NPLs from 30 June 2022 to 30 June 2025 is shown in
Figure 13.


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Figure 13: Trend in on- Performing Loans

Source: Reserve Bank of Zimbabwe, 2025

Banking Sector Profitability
67. Aggregate banking sector profit amounted to ZiG5.0 billion (US$184.07 million)
for the half year ended 30 June 2025, compared to ZiG10.4 billion (US$760.37
million) reported in the corresponding period in 2024.

68. The income mix for the sector for June 2024 and June 2025 is depicted in Figure
14.


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Figure 14: Banking Sector Income Mix June 2024 and June 2025

Source: Reserve Bank of Zimbabwe, 2025

69. The return on assets and return on equity ratios were 4.4% and 12.8% as at 30 June
2025, compared to 13.4% and 35.7% as at 30 June 2024, respectively.

70. The reduction in the dominance of non-funded income emanating from revaluation
gains and foreign exchange changes reflects lesser reliance on foreign exchange
gains by institutions due to the stability of the ZiG currency. The anticipated
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Banking Sector Deposits and Liquidity
71. During the period under review, the banking sector’s average prudential liquidity
ratio was 56.8% as at 30 June 2025, and 18 out of 19 banking institutions reported
ratios which were compliant with the regulatory minimum ratio of 30%.

72. As at 30 June 2025, total banking sector deposits amounted to ZiG112.8 billion,
an increase from ZiG89.1 billion recorded as at 31 December 2024. Foreign
currency denominated deposits accounted for 84.7% of total deposits as at 30 June
2025.

Sustainable Banking Practices
73. Adoption of sustainability standards continues to gain momentum in the
Zimbabwean banking sector with 15 out of 19 banking institutions, two (2)
development finance institutions and one (1) deposit-taking microfinance
institution undergoing the Sustainability Standards & Certification Initiative
(SSCI) being driven by the European Organization for Sustainable Development
(EOSD).

74. Banking institutions complied with the Monetary Policy Statement of February
2025, which required banking institutions to nominate suitably qualified and/or
experienced board sustainability champions by 31 March 2025.

75. The board sustainability champions are expected to among others:
a)
lead the transformation and reorientation of the banking institutions into
sustainable, green and climate-proofed institutions through the adoption of
sustainable banking practices;
b)
play a pivotal role in steering the banking institutions towards long-term
sustainability with a forward-looking perspective;
c)
lead the integration of sustainability and climate change considerations into
the institutions’ strategies, governance and risks management systems; and

d)
promote the alignment of the institutions’ operations to the country’s national
development priorities and other relevant guidance by international standard
setting bodies.

Adoption of Artificial Intelligence in the Financial Sector
76. The Reserve Bank undertook a survey in May 2025, which indicates that financial
institutions are increasingly adopting Artificial Intelligence (AI) tools in their
business operations. The main activities benefiting from AI technologies include
credit scoring, cybersecurity and systems on customer service and operational
efficiency. In particular, there is notable interest in advanced AI such as Agentic
and Generative AI.

77. There are numerous benefits of adopting AI in the financial sector ranging
from increased customer satisfaction, financial inclusion, enhanced operational
efficiency to revenue growth. Meanwhile, there are a number of risks and
challenges associated with AI adoption, which include model bias and fairness,
cybersecurity vulnerabilities, data quality and data privacy concerns. The risks
associated with AI adoption need to be addressed proactively.

78. Meanwhile, the Reserve Bank is currently developing AI specific guidelines to
provide guidance to regulated institutions on the minimum AI implementation
requirements. The guidelines are expected to complement the existing
Cybersecurity and Resilience guidance.

AML/CFT/CPF Supervision
79. As part of ongoing efforts to enhance the Anti-Money Laundering/Counter
Financing of Terrorism/Counter Proliferation Financing (AML/CFT/CPF)
supervisory effectiveness and compliance culture among banks and microfinance
institutions, a number of initiatives were conducted.

80. The AML/CFT/CPF Guideline No.1–2025/BSS&FS was issued to banking and
microfinance institutions in line with section 3(3) of the Money Laundering and
Proceeds of Crime Act [Chapter 9:24], effective 1 June 2025.

81. Licensing requirements were enhanced by including the screening of shareholders,
directors and senior management of banking and microfinance institutions against
the United Nations Security Council Resolutions (UNSCR) list, as well as
declaration of source of income and source of wealth.

82. Following the dissemination of the 2024 National Risk Assessment (NRA) results
by the Financial Intelligence Unit (FIU), banking and deposit taking microfinance
institutions are required to adopt and implement the results of the NRA, by
updating their AML/CFT/CPF frameworks and other activities.

83. Banking and deposit taking microfinance institutions are required to submit to the
Reserve Bank, board approved Action Plans on the activities and initiatives
undertaken to incorporate the results of the NRA, including evidence thereof, latest
by 31 December 2025.

84. The results of the National Risk Assessment can be accessed on the FIU website.

PERFORMACE OF THE MICROFIACE SECTOR
85. The microfinance sector continues to support the financial inclusion agenda
through provision of finance to low income and underserved communities and
their micro, small and medium enterprises. The key performance indicators for the
microfinance sector (deposit-taking and credit-only microfinance institutions) are
summarised in Table 8.

Table 8:Microfinance Key Performance Indicators: 30 June 2025
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Source: Reserve Bank of Zimbabwe, 2025


Microfinance Sector Capitalisation
86. The microfinance sector reported aggregate equity of ZiG3.77 billion as at 30 June
2025, a marginal decrease from ZiG3.81 billion as at 31 March 2025. As at 30
June 2025, five (5) out of the eight (8) operational DTMFIs in the subsector were
compliant with the minimum capital requirement of the local currency equivalent
to US$5 million.

87. The capital levels for the operating DTMFIs is indicated in Table 9.

Table 9:DTMFIs Sub-sector Capitalisation
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Exchange rate : US$1: ZiG26.7654 as at 31 March 2025
: US$1: ZiG26.9457 as at 30 June 2025
** Lion Microfinance’s Core capital is as at 31 March 2025.
Source: Reserve Bank of Zimbabwe, 2025

Portfolio Quality
88. The microfinance industry registered a 6.52% increase in total microfinance loan
portfolio from ZiG5.98 billion as at 31 March 2025 to ZiG6.37 billion as at 30
June 2025. The top 30 microfinance institutions had a total loan portfolio of
ZiG5.53 billion, representing 86.76% of the total industry loan portfolio, pointing
to high concentration within the sector. Credit risk in the microfinance sector
remains elevated with PaR (>30 days) ratio of 13.07%, up from 11.58% in the
previous quarter, against the international benchmark of 5%.

Deposits Mobilization
89. The DTMFIs sub-sector, as at 30 June 2025, registered a 34.81% increase in total
deposits from ZiG1.58 billion as at 31 March 2025, to ZiG2.13 billion, largely
driven by foreign currency deposits, which accounted for 90.68% of total deposits.
The prudential liquidity ratio for the DTMFI as at 30 June 2025 was 135.85% a

decline from 177.45% as at 31 March 2025. The prudential liquidity ratio was
significantly above the prudential minimum threshold of 30%.

Predatory Lending Practices by Microfinance Institutions
90. In pursuit of financial stability and fostering consumer protection, the Reserve
Bank undertook a number of market conduct activities to assess microfinance
institutions’ compliance with the Core Client Protection Principles as enunciated
in the First Schedule of the Microfinance Act [Chapter 24:30].

91. In the February 2025 Monetary Policy Statement, the Reserve Bank highlighted
that it had received a number of complaints against microfinance institutions
regarding predatory lending practices.

92. The surveys and the market conduct supervision inspections completed to date,
established that in general, the microfinance institutions largely complied with the
Microfinance Act and the Consumer Protection Framework. There were, however,
incidences of non-compliance relating to disposal of clients’ assets without the
requisite court order and over-deductions of monthly payments.

93. The Reserve Bank has instituted supervisory action on the non-compliant
institutions and will continue to intensify its market conduct surveillance on the
sector during the year to ensure compliance.

Interest rates and Charges
94. The ongoing supervisory activities by the Reserve Bank noted that while a number
of credit-only microfinance institutions reported charging interest rates on loans
and advances ranging between 7% to 15% per month depending on the source of
the working capital, there were some few outliers charging interest rates as high
as 25% per month. The Reserve Bank is instituting appropriate corrective
supervisory actions on these microfinance institutions, in line with section 37 of
the Microfinance Act [Chapter 24:30].

95. Microfinance institutions are required on an ongoing basis, to adhere to
responsible pricing practices and ensure that effective interest rates (all-inclusive)
reflect the cost of funds, fairness, and the need to avoid over-indebtedness. The
Reserve Bank will continue to monitor the terms and conditions of business
activities to ensure adherence to the Microfinance Act, and the Consumer
Protection Framework No. 01-2017/BSD.


Use of Digital Financial Services by Microfinance Institutions
96. The survey conducted by the Reserve Bank showed that approximately 67% of the
microfinance institutions have adopted the use of technology in microfinance
business for onboarding clients, loan processing, loan repayments and loan
classification. However, microfinance institutions cited high costs of investment
in technology as a major impediment in implementing and adopting digital
financial services.

97. Digital financial services assist in the delivery of affordable and suitable financial
services to the underserved and marginalized segments of society. Microfinance
institutions are, therefore, urged to invest more in the adoption of digital financial
services to enhance outreach and financial inclusion, improve operational
efficiency and facilitate long-term sustainability.

98. In line with the First Schedule of the Microfinance Institutions Code of Conduct,
Microfinance Institutions should provide digital financial literacy to their clients.
In addition, given the increased use of digital tools in offering financial services,
the microfinance institutions are required to enhance their cybersecurity risk
management framework to align it with developments in the financial sector.

FIACIAL ICLUSIO
99. The Reserve Bank continues to spearhead implementation of the National
Financial Inclusion Strategy II, in collaborating with stakeholders with the view
of building a sustainable and inclusive financial system that has capacity to
contribute meaningfully to the developmental aspirations of the nation.

100.Operationalisation of the National Financial Inclusion Governance structures
commenced during the first half of 2025, with the National Financial Inclusion
Technical Committee having met on 15 April 2025. The National Financial
Inclusion Steering Committee is scheduled to meet in the third quarter of 2025.


CREDIT IFRASTRUCTURE
Credit Registry
101.The credit information infrastructure continued to expand, playing a pivotal role
in enhancing credit access and supporting sound lending practices. The
collaborative efforts of the Credit Registry and the three (3) private credit bureaus
have sustained the availability of reliable borrower credit data, strengthening both
credit market efficiency and the resilience of the financial system. By enabling
informed credit decisions, the system remains an essential tool in promoting
responsible lending and managing credit risk across the financial sector.

102.As at 30 June 2025, all the credit reporting institutions maintained 24.4 million
searchable records. The distribution of credit records by institution, is shown in
Figure 15.

Figure 15: Cumulative Loan Records per Credit Reporting Institution

Source: Reserve Bank of Zimbabwe, 2025
103.In addition, the distribution of inquiries across credit reporting institutions is
illustrated in Figure 16.

Figure 16: Distribution of Inquiries per Credit Reporting Institution

Source: Reserve Bank of Zimbabwe, 2025


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104.As at 30 June 2025, statistics from the Credit Registry reveal a 45.3% increase in
cumulative inquiries, rising from 4,701,891 on 30 June 2024, as shown in Figure
17.
Figure 17: Cumulative Credit Registry Usage Status

Source: Reserve Bank of Zimbabwe, 2025
105.The distribution of loans to individual borrowers by age and gender in the Credit
Registry database, as at 30 June 2025, was shown in Figure 18.

Figure 18: Distribution of Loans Age & Gender

Source: Reserve Bank of Zimbabwe, 2025


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Collateral Registry
106.As at 30 June 2025, the Collateral Registry recorded 3,329 active registrations with
a combined principal value of ZiG56.3 billion. Microfinance institutions were the
leading users with 1,384 registrations, followed by banks with 1,167 entries.

107.In terms of the value of movable collateral, banks accounted for ZiG32.0 billion,
while law firms registering on behalf of clients recorded a total value of ZiG23.9
billion, as illustrated in Figure 19.
Figure 19: Value of Registered Securities as at 30 June 2025

Source: Reserve Bank of Zimbabwe, 2025

108.Since its inception in November 2022, the Collateral Registry has recorded a total
of 7,074 security interest notices in movable assets. Of these, 3,329 notices (47%)
remain active, while 3,745 (53%) have expired.

109.Lending institutions continue to expand the types of movable assets which qualify
as collateral. During the half-year to 30 June 2025 collateral ranged from


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household goods, private vehicles, trucks, agricultural equipment to shares as
further shown in Figure 20.
Figure 20:Types of Collateral as at 30 June 2025

*Other includes motorcycles, trailers and other movable assets that are yet to be classified in the Collateral Registry
system.
Source: Reserve Bank of Zimbabwe, 2025

110.MFIs also registered the highest number of security interests searches as shown in
Figure 21.


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Figure 21:Searches by Client as at 30 June 2025

Source: Reserve Bank of Zimbabwe, 2025

ATIOAL PAYMET SYSTEMS DEVELOPMETS

111.In line with its statutory mandate, the Reserve Bank continued to safeguard the
stability and resilience of the national payment systems through robust licensing,
risk-based supervision and strengthened AML/CFT/CPF oversight.

112.The Reserve Bank continued to promote the adoption and usage of digital financial
services to enhance efficiency, security and financial inclusion within the
economy. In addition, the Reserve Bank sought to reduce reliance on cash, broaden
access to payment services, and accelerate the transition towards a digitally
inclusive financial ecosystem through targeted policy interventions, stakeholder
engagement and support for enabling infrastructure.


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Digital Transactions
113.Significant strides have been made in advancing the development of payment
systems, particularly through the growing adoption of instant payment schemes
and mobile money services. The focus for the Reserve Bank is now on ensuring
payments systems efficiency, safety and cost effectiveness.

114.During the first half of 2025, a total of 381 million transactions valued at ZiG1.2
trillion were undertaken through different payment streams. Figure 22 provides a
detailed illustration of the trends in transaction values and volumes on a monthly
basis.

Figure 22: Digital Payments Transaction Values and Volumes from Jan - Jun

*Digital Payments Include Transactions conducted on the RTGS, Card, Mobile Money, Mobile Apps and Online platforms
Source: Reserve Bank of Zimbabwe, 2025

115.The ZiG/USD ratio of transactions processed through the RTGS system was
around 40/60 as at June 2025.


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Real Time Gross Settlement System (RTGS)
116.During the period under review, the value of transactions processed through the
RTGS System was ZiG248.9 billion and USD$16.7 billion with corresponding
volumes of 2.3 million and 3.1 million, respectively.

117.Following the upgrade of the RTGS system in November 2024, seven (7) banks
are now able to process SWIFT ISO20022 compliant messages in preparation for
the November 2025 cut-off date for MT messages. In this regard, we urge the
remaining banks to ensure that they are ready to process MX ISO20022-compliant
transactions.

Interoperability
118.The Reserve Bank is actively promoting greater interoperability across various
payment platforms, including mobile money providers and financial institutions.
This effort is aimed at reducing market fragmentation and fostering healthy
competition, across the entire payment landscape. The Reserve Bank continues to
engage stakeholders to standardize payment formats and rules, thereby
streamlining processes and enhancing the overall efficiency of the payment
ecosystem.

119.The interoperability transactions values processed for retail digital transactions
continued to trend upwards with June 2025 value peaking at ZiG2.2 billion. The
volumes for the 6 months to June 2025 are shown in Figure 23.

Figure 23: Interoperability transactional values and volumes Jan to Jun 2025
Source: Reserve Bank of Zimbabwe, 2025

Supervisory and Oversight Activities
120.The Reserve Bank will continue to strengthen its oversight of payment systems
through a combination of onsite inspections and offsite surveillance. These
supervisory activities are aimed at ensuring that payment system operators and
participants comply with regulatory requirements, uphold operational resilience,
manage risks effectively, and maintain the safety, efficiency, and integrity of the
payments ecosystem.

121.The payments sector has continued to demonstrate a strong commitment to
international AML/CFT/CPF standards, as well as domestic regulatory
requirements. Payment service providers (PSPs) have progressively enhanced
their compliance culture in line with the risk-based approach.

122.The Reserve Bank urges all payment service providers to continue strengthening
their AML/CFT/CPF and cyber risk management practices to preserve the
resilience, integrity, and security of the financial system.

Adapting Regulatory Frameworks
123.The rapid evolution of financial technology necessitates a dynamic and adaptive
regulatory framework. The Reserve Bank continued to review and adjust its
regulations to accommodate emerging payment system technologies. The Bank’s
approach seeks to strike a balance between fostering innovation and ensuring
robust oversight, consumer protection, and financial stability.

124.Recent amendments to the licensing regulations for money transmission and
mobile banking services, including an updated fee structure, was aimed at
streamlining entry for new payment service providers while maintaining
regulatory integrity.

125.The Reserve Bank remains committed to promoting responsible innovation within
the payments ecosystem and will continue to monitor the development and
deployment of new products through its oversight framework to ensure their
safety, soundness, and alignment with public interest objectives.

Regional and International Developments
126.The Reserve Bank continues to explore collaborations with regional and
international partners to facilitate smooth and more affordable international
transactions, thereby supporting trade, investment, and ultimately economic
growth.

127.To date, local banks and payment platforms are integrating into regional payment
infrastructures such as the Pan-African Payment and Settlement System (PAPSS),
launched by the African Continental Free Trade Area (AfCFTA) Secretariat and
Afreximbank, among others.

128.During the period under review, the 14 local banks on the SADC–RTGS processed
1,949 transactions valued at ZAR2.41 billion, a decrease of 23% compared to the
same period in 2024.

Digital Financial Services Market Conduct
129.Consistent with efforts to promote financial inclusion and consumer protection,
the Reserve Bank conducted nationwide outreach programmes in collaboration
with regulatory partners, Postal and Telecommunications Regulatory Authority of
Zimbabwe (POTRAZ), Consumer Protection Commission (CPC) and the
Consumer Council of Zimbabwe (CCZ).

130.These initiatives are focused on promoting fair digital financial services,
enhancing financial literacy, and strengthening financial stability.

131.The Reserve Bank encourages all participants in the payment systems ecosystem
to intensify inclusive consumer education efforts, with particular emphasis on
rights awareness, dispute resolution mechanisms, and responsible usage of digital
financial services.

SECTIO FIVE
MOETARY AD FIACIAL CODITIOS

132.This section of the Mid-Term Monetary Policy Statement discusses the monetary
and financial conditions underpinning the current monetary policy stance. It
further gives detailed explanations and clarity on key fundamentals which include:

• Monetary Policy Communication;
• Monetary Policy Framework;
• Monetary Policy Transmission Mechanism;
• Annual Inflation Dynamics and Base Effects;
• Interest Rate Policy;
• Feedback on Conduct of Foreign Exchange Transactions;
• Foreign Exchange Net Open Positions; and
• ZiG in the Family of Selected African Currencies.

133.The Reserve Bank continues to deploy its monetary policy instruments to entrench
stability, with price stability remaining its primary monetary policy objective. The
monetary policy stance which was maintained during the first six months to June
2025, has supported the price, currency and exchange rate stability in the economy.
Reflecting the stability, monthly inflation has remained low and stable averaging
about 0.6% from February to July 2025 while annual inflation is expected to end
the year at below 30%.

134.The Reserve Bank remains committed to implementing a prudent monetary policy
stance that supports the continued disinflation trajectory and envisaged economic
growth for 2025.

Monetary Policy Communication
135.Communication has become an integral element of modern monetary policy
management. The current monetary and financial conditions have been shaped by
effective monetary policy communication. Specifically, the Reserve Bank has
adopted communication as part of its monetary policy toolkit as it helps to shape
expectations, enhance transparency and increase the effectiveness of monetary
policy itself.

136.Pursuant to this, the Reserve Bank has been regularly publishing Monetary Policy
Committee Communiques, Quarterly Snapshots of key monetary and financial
indicators, Weekly, Monthly and Quarterly Economic Bulletins, Explainers and
other ad hoc Press Statements. In addition, the Reserve Bank has intensified its
consultative and inclusive approach by engaging a wider spectrum of stakeholders
to inform the monetary policy formulation process. The stakeholder consultation
and inclusiveness is expected to anchor market expectations, provide
important signals (forward guidance) and yield the mutually desired
outcomes.

137.This Monetary Policy Statement also contains a summary of stakeholder
interventions and comments that also informed the monetary policy formulation
process (Annex - Summary of Stakeholder Consultations on Monetary Policy
Implementation).

RBZ Monetary Policy Framework Explained

138.The Reserve Bank of Zimbabwe is currently using a hybrid approach to
monetary policy management involving reserve money as the operational target
and the nominal exchange rate as the intermediate target to achieve its ultimate
policy objective of price stability. Types of monetary policy frameworks that
central banks can use to achieve their policy objectives and the key tenets is shown
in Box 2.

Monetary policy frameworks evolve in line with macro-economic developments, country peculiarities or
idiosyncrasies. More generally, central banks should have a coherent, transparent and forward-looking
monetary policy framework with a primary goal of price stability. The common monetary policy
frameworks include inflation targeting, monetary targeting and exchange rate targeting. Central banks can
choose one of these frameworks or a combination (hybrid), depending on the obtaining monetary and
financial conditions in the economy. A monetary policy framework is generally composed of instruments,
operational target(s), intermediate target(s) and the ultimate objective. Instruments are tools that are used
to influence the desired operational target(s). Intermediate targets are the variables that assist in achieving
the policy objective. An intermediate target is, however, not necessarily a policy objective.


In this regard, the Reserve Bank of Zimbabwe is currently using a hybrid approach in which reserve money
is the operational target and the exchange rate is the intermediate target. In the Zimbabwean context, the
exchange rate is the nominal anchor. The stability of the exchange rate is expected to result in low and
stable prices, which is the ultimate objective of the Reserve Bank’s monetary policy framework. For the
avoidance of doubt, the Reserve Bank is not targeting the exchange rate as the operational target and
therefore, does not interfere in the foreign exchange market. The Reserve Bank is using a floating
(market determined) exchange rate system and only influences exchange rate movements through ensuring
prudent management of reserve money.
The combination of optimal control of money supply growth with a market-determined exchange rate will
support the lasting stability of prices. The controlling of reserve money to stabilise exchange rate is
informed by the need to address previous episodes of exchange rate and inflation volatility, high degree of
dollarisation as well as confidence and trust deficit in the economy. Other country experiences have
demonstrated that in highly dollarised economies, prices are more responsive to fluctuations in the exchange
rate.
The Reserve Bank is currently using the Bank Policy Rate, statutory reserve requirements, Non-Negotiable
Certificates of Deposit (NNCDs), and sales and purchases of foreign currency as monetary policy
instruments to control the growth of reserve money.
To enhance the effectiveness of monetary policy, in line with increased use of ZiG in the economy, the
Reserve Bank is working on transitioning to indirect monetary policy instruments, which will mainly
depend on open market operations. This will also enable the Reserve Bank to move to inflation targeting in
the medium term in line with the SADC regional monetary policy harmonisation framework.
Understandably, on the onset in April 2024, the Reserve Bank recalibrated its Monetary Policy Framework
to underpin the disinflation program and support the convergence of annual inflation towards the regional
benchmarks.
•
Open Markert
Operations
•
Standing Facilities
•
Sales and Purchases
of Foreign Currency
•
Statutory Reserve
Requirements
•
Bank Policy Rate
Monetary Policy
Instruments
Reserve Money
Or
Reserves
Or
Short Term
Interest Rate
Operational
Targets
Broad Money
Supply
Or
Exchange rate
Or
Inflation
forecast
Intermediate
Targets
•
Price Stability
•
Output
•
Financial
Stability
Ultimate Targets
Box 2: The Monetary Policy Framework Explained1
COMPOETS OF MOETARY POLICY FRAMEWORKS

Exchange Rate Developments
139.The interbank exchange rate remained largely stable against the US$, closing the
month of June 2025 at ZiG26.95 per US$. The parallel market exchange rate
premium has remained stable, below 30% since January 2025 as shown in Figure
24.

Figure 24: ZiG/US$ Exchange Rates and Premium (August 2024 to June
2025)

Source: RBZ and Market Intelligence Surveys, 2025

140.The interbank exchange rate has notably strengthened in early July 2025, partly
reflecting the effectiveness of enhanced NNCDs in money supply management.

ZiG in the Family of Currencies in SADC and Beyond
141.The stability of the ZiG currency, introduced in April 2024, alongside the
recalibrated monetary policy framework has increased predictability and certainty
in monetary and financial affairs. Against this background, ZiG performance has
compared well with regional currencies in terms of cost of living, thereby,
establishing its position in the family of selected currencies in the Southern
African Development Community (SADC) and beyond as shown in Table 10.


30-Aug-24
6-Sep-24
13-Sep-24
20-Sep-24
27-Sep-24
4-Oct-24
11-Oct-24
18-Oct-24
25-Oct-24
1-Nov-24
8-Nov-24
15-Nov-24
22-Nov-24
29-Nov-24
6-Dec-24
13-Dec-24
20-Dec-24
27-Dec-24
3-Jan-25
10-Jan-25
17-Jan-25
24-Jan-25
31-Jan-25
7-Feb-25
14-Feb-25
21-Feb-25
28-Feb-25
7-Mar-25
14-Mar-25
21-Mar-25
28-Mar-25
4-Apr-25
11-Apr-25
18-Apr-25
25-Apr-25
2-May-25
9-May-25
16-May-25
23-May-25
30-May-25
6-Jun-25
13-Jun-25
20-Jun-25
27-Jun-25
Premium
Exchange Rate
Premium
Interbank Rate
Money Changers

Table 10: ZiG in the Family of Selected Currencies in SADC and Beyond

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1 Countries ranked by USD exchange rates in terms of the respective countries’ local currency.
2 15 SADC countries and 5 other African countries.
3 USD exchange rates in terms of the respective countries’ local currency
4 ZiG exchange rate to respective countries’ local currency where ZiG is 1. In nominal terms, when the number is more than 1 it means ZiG is stronger and vice
versa.
5 The cost of a comparative common consumer basket of goods and services across all countries. When the index is more than 1 it means the basket for that
country is more expensive than Zimbabwe and vice versa. The comparative common consumer basket includes the following: Meal at inexpensive Restaurant;
Rice (white), 1kg; Chicken Fillets, 1kg; Water, 1.5 litre bottle; Loaf of Fresh White Bread, 500g; One-way Ticket local transport; Basic (Electricity, heating,
Cooling, Water and Garbage) for 85m2 Apartment; Mobile Phone Monthly Plan with Calls and 10GB of Data.
6 Measures a country’s nominal GDP divided by the total population as at end 2024 for Zimbabwe GDP of US$ 45 billion and population of 16 million was
used.
7 Shows the highest bank note denominations for respective National currencies which are legal tender. Statutory Instruments (S.I) 60 of 2024, promulgated ZiG
bank note denominations ZiG10, ZiG20, ZiG50, ZiG100, and ZiG200 (highest). However, currently in Zimbabwe ZiG20 is the highest note in circulation.

Sustained Disinflation
142.The prudent management in money supply resulted in a stable interbank exchange
rate which resulted in the slowdown of exchange rate pass-through to prices as
evidenced by the decline in month-on-month inflation. Annual inflation was,
however, elevated due to base effects from the sharp depreciation experienced in
September 2024 and this is explained in Box 3.

Base effects are inherent in the calculation of annual inflation but are, however, pronounced and
normally reported in cases where there is a once off extreme increase in monthly inflation in a period
covered by year-on-year inflation. The base effects normally result from a sharp increase in Value
Added Tax (VAT), energy prices and sharp exchange rate depreciation.

In this case annual inflation will not be due to the recent short-term changes in inflation from one
month to the next but also to previous price volatility in the previous year which is called the base
effect.

Importantly the rapid change in CPI level from September 2024 to January 2025 has had implications
for annual inflation which is related from moving from a low base to a high base. Current CPI is on
the high base whereas the CPI 12 months earlier is still on the low base.
In June 2025 around 50% of current annual inflation is explained by the impact of the base
effect induced by the rise in CPI from September 2024 to October 2024.


Intuitively, base effects have cycles of 12 months, whereafter, the impact of high base effects will be
shown in lower annual inflation assuming that month-o n-month price developments remain relatively
stable. In this regard, once the base effects run their full course in October 2025 the annual inflation
profiles of the ZiG CPI and the Implied CPI will converged to end the year below 30%.


ZiG CPI and Implied CPI April 2025 to June 2025

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Annual
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85.7
April-25
48.1
92.1
May-25
49.4
92.5
Jun-25
44.8
95.8
Jul-25
45.8
98.1
Aug-25
40.6
91.0
Sept-25
42.0
42.0
Oct-25*
29.6
29.6
ov-25*
27.4
27.4
Dec- 25*
Box 3: Impact of Base Effects on Annual ZiG Inflation

Monetary Policy Transmission Mechanism
143.Monetary policy transmission refers to the mechanisms and systems through
which policy induced change on monetary policy instruments are channelled or
conveyed to the ultimate policy objectives. The monetary policy instruments
usually include the Bank Policy Rate, use of standing facilities, open market
operations such as Treasury Bills and NNCDs, and statutory reserve requirements.
The ultimate objectives are usually on output growth, price and exchange rate
stability.

144.For Zimbabwe, however, policy instruments are the Bank Policy Rate and
NNCDs, while the ultimate policy objective is price stability. The Reserve Bank
has been firming up on its monetary policy transmission mechanism given the
recalibrated monetary policy framework introduced in April 2024. In this MidTerm Monetary Policy Statement the focus is on money supply growth and
inflation nexus.

Money Supply Growth and Inflation exus
The current monetary policy thrust of the Reserve Bank of Zimbabwe which focuses on controlling
reserve money growth to reduce inflation is based on the historical close relationship observed between
money supply growth and inflation, normally observed during periods of high inflation and exchange
rate volatility. Empirical evidence from the Reserve Bank and other researchers shows a 1 to 1
relationship between money and inflation between 2003 and 2008 and also recently between 2017
and 2023.
The relationship between money supply growth and inflation is based on Monetarists’ view (Milton
Friedman) that inflation is always and everywhere a monetary phenomenon. This means that a
sustained rise in inflation is primarily driven by increases in money supply and credit in the economy.
The relationship is derived from Fisher’s equation of exchange referred to as the Quantity theory of
Money (QTM). The QTM is expressed as follows:


The relationship between money supply, inflation and output growth as given by (2) is such that any
growth in money supply is passed through to inflation (P), accommodated through increased economic
activity (Q) and adjustments in money velocity of circulation by economic agents (V). The velocity is,
however, assumed to be constant in the short-term and therefore, the increase in money supply is
generally absorbed by inflation for a certain level of growth.
When the velocity is not constant the 1 to 1 relationship between inflation and money may not
necessarily hold especially when there is some economic growth.
Recent Global Experiences on the exus Money Supply and Inflation
Empirical evidence post COVID-19 on the money supply and inflation relationship has resulted in what
is known as the Two-Regime View of Inflation. The Two-Regime View shows that the relationship
between money and inflation depends on the level of inflation in an economy. The relationship is weak
when inflation is low, normally below 4%, while the relationship is strong and close to 1 when inflation
is high and above 20%. The BIS in its 2022 Annual Report, which was expanded in the BIS Papers
Number 133 of March 2023, shows the following relationship between money and inflation.
Box 4: Monetary Policy Transmission Mechanism
MV=PQ.................................................................. (1)
Where M is money supply, V is velocity of circulation, P is the general price level, and Q is real
output such that PQ is nominal gross domestic product.
In growth terms, equation 1 can be re-written as follows:
m=p+q – v .................................... (2)

Recent Global Experiences on Money Supply and Inflation... continued
The findings show that:
• When inflation is very high the relationship is 1 to 1 in line with the money
neutrality concept in the long-run.
• When inflation is below 4%, the relationship is weak; and
• That when inflation is between 10 and 20% the relationship between money supply
growth and inflation is around 50-60%.
The Two-Regime View of Inflation was also corroborated by the International Monetary Fund’s
Africa Department in Keynote Address on Evolution and Challenge for Monetary Policy in Africa
during the 50th Anniversary of the Banco de Moçambique.


Source: IMF, Evolution and Challenges for Monetary Policy in Africa, 2025
As the Reserve Bank consolidates price stability and inflation goes below 30% by end of year
2025, the relationship between money supply growth and inflation may weaken and enable
sustained price stability even in periods of small and unavoidable shocks to money supply.
It is against this background that the Reserve Bank’s monetary policy framework will
transition from the hybrid approach to an inflation targeting regime in the medium-term
when inflation has been reduced to single digit levels in line with the SADC benchmarks.


Broad Money Growth and Inflation in SSA and EMEs

Effective Management of Money Market Liquidity
145.The Reserve Bank maintained a tight monetary policy stance during the first half
of 2025 and will continue with its current stance during the next six months. As
the value of payments through the Zimbabwe Electronic Transfer and Settlement
System (ZETSS) increased, the Reserve Bank adjusted the Optimal Liquidity
Level (OLL) from ZiG500 million to ZiG600.5 million on 27 May 2025.

146.To align market liquidity with the OLL, excess liquidity was mopped through
issuance of NNCDs. The tenor of NNCDs was adjusted from multiple maturities
of 7, 14, 21 and 30 days to only 30 days effective 27 May 2025. Early redemption
of NNCDs is allowed only for purposes of buying foreign currency from the
Reserve Bank or payment of taxes into the Main Exchequer Account at the Bank.
The outstanding NNCDs were ZiG1,536 million on 30 June 2025.

Overnight Accommodation
147.There was minimum recourse to the lender of last resort facility during the first
half of 2025.


Interest Rates
148.The Reserve Bank maintained the Bank Policy Rate at 35% since 27 September
2024, to curtail exchange rate and inflation pressures. Concomitantly, minimum
and maximum corporate lending rates increased from 40% to 40.27% and 45.6%
to 46.51%, respectively. Figure 26 shows the developments on the Bank Policy
Rate, vis-a-vis lending rates since the introduction of the ZiG in 2024.

149.In line with the current tight monetary policy stance, the overnight accommodation
rate remained at 40%. The overnight accommodation window remains available
to assist banks facing liquidity challenges. There was minimal reliance on the
lender of last resort facility as most banks relied on the liquidation of NNCDs to
meet their liquidity needs.

Figure 25: Bank Policy Rates and Versus Lending Rates (%)

Source: Reserve Bank of Zimbabwe, 2025
Determination of the Bank Policy Rate
150.The Bank Policy Rate is calibrated to take into account the balance of risks
between output and inflation. Box 5 explains the parameters considered in the
determination of the Bank Policy Rate.


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The Bank Policy Rate currently at 35% is assessed to be appropriate to reduce inflation towards the end of
year target of 30% and support the envisaged growth of 6% for 2025.
The Monetary Policy Committee reviews the Bank Policy Rate at the quarterly or ad hoc MPC meetings
based on a wide range of information on monetary and financial conditions as well as economic activity.
The main rationale for using the Bank Policy Rate as a monetary policy tool, is that it influences the cost
of credit in the economy. In this regard, an increase in interest rates is expected to result in a slowdown of
credit to the private sector and vice versa which will in turn affect consumption and investment. By
influencing credit in the economy, interest rates impact on money supply growth and inflation.
To be effective, the interest rate policy should take into account the level of inflation to ensure positive real
interest rates in the economy. Normally, the calculation of real interest rates takes into account expected
inflation. However, in economies where inflation is high and the central bank wants to frontload a
disinflation programme, the real interest rate uses current inflation as opposed to expected inflation. This is
because expectations are likely to be adaptive and backward-looking. In doing this, monetary policy will
be incorporating the inflation expectation formation process and inflation persistence.
The central bank, in setting the policy rate, may also use the Taylor Rule as a monetary policy reaction tool
to balance the inflation and output trade-offs. The rule allows the central bank to set the weights depending
on its inflation and growth objectives. The Taylor rule typically uses parameters, often 0.5 for both inflation
and output gaps to determine the magnitude of the interest rate response to changes in inflation and output.
The parameters for inflation and the output gap may be adjusted according to the balance of risks. In cases
of elevated inflation risk, a higher weight is allocated to the inflation component65


Box 5: Determination of the Bank Policy Rate 1
The real interest rate is calculated as follows:


Where r is the real interest rate, the nominal interest rate (Bank Policy Rate) and is expected
inflation or current inflation. Since these variables are in percentages and for practical purposes,
equation (1) can be simplified as follows:

The interest rate using the Taylor Rule is calculated as follows:


This can be simplified as Bank Policy Rate ( ) = Natural Real Interest Rate + Current
Inflation ( + 0.5 * (Inflation Gap) + 0.5 * (Output Gap)
Where: is the policy interest rate set by the central bank, is the economy’s long-run real
interest rate (natural real interest rates), is the actual inflation and
is the central bank
inflation target,
is actual output and

is potential output

Currently, the Reserve Bank uses the Taylor Rule to guide the policy rate determination alongside other
macroeconomic and financial indicators. As the Reserve Bank transitions towards an inflation targeting
regime, the Taylor Rule will become an integral component or the monetary policy block for the central
bank’s reaction function in the Quarterly Projection Model for monetary policy analysis.
Monetary policy also aims to ensure positive real interest rates in order to support price stability, growth
and financial stability. In this regard, an increase in inflation results in a decline in real interest rates and in
this context the Reserve Bank reacts by hiking the policy rate to ensure that positive real interest rates are
maintained.
The current policy rate of 35% is, therefore, set considering the expected end of year annual inflation of
30%, yielding a positive real interest rate of 5%. The real interest rate of 5% is consistent with experiences
of emerging and developing economies. Considering current annual inflation levels, the implied real interest
rate would be negative. The Reserve Bank considers the 35% policy rate to still be appropriate
notwithstanding the elevated annual inflation, which is largely due to the base effects. As shown in Box 2,
discounting the impact of the base effect, the implied annual inflation is consistent with the current policy
rate.
In addition, the policy rate has been assessed to be compatible with the envisaged growth of 6% for 2025,
taking into account improved output observed during the first half of 2025, particularly the recovery in
agriculture, mining and manufacturing.
The Reserve Bank will, however, adjust the policy rate in line with inflation developments and incoming
data on economic activity. Recent country experiences from post Covid 19 disinflation programmes show
that central banks normally reduce the policy rate once annual inflation goes below the policy rate and is
sustained. In addition, the tightening cycle is normally rapid to quickly contain inflationary pressures, while
the loosening cycle is gradual, data dependent and can be even slower in times of heightened economic
uncertainty.


Jan-20
May-20
Sept-20
Jan-21
May-21
Sept-21
Jan-22
May-22
Sept-22
Jan-23
May-23
Sept-23
Jan-24
May-24
Sept-24
Jan-25
May-25
ECB
Inflation
Policy rate

Jan-20
May-20
Sept-20
Jan-21
May-21
Sept-21
Jan-22
May-22
Sept-22
Jan-23
May-23
Sept-23
Jan-24
May-24
Sept-24
Jan-25
May-25
BoE
Inflation
Policy Rate

Jan-20
May-20
Sept-20
Jan-21
May-21
Sept-21
Jan-22
May-22
Sept-22
Jan-23
May-23
Sept-23
Jan-24
May-24
Sept-24
Jan-25
May-25
SARB
Inflation
Policy Rate

Jan-20
May-20
Sept-20
Jan-21
May-21
Sept-21
Jan-22
May-22
Sept-22
Jan-23
May-23
Sept-23
Jan-24
May-24
Sept-24
Jan-25
May-25
FED
Inflation
Policy Rate
Policy Rates and Inflation 2020 to 2025
Source: Central Banks and BIS, 2025

Statutory Reserves
151.Statutory reserve requirements for both local and foreign currency deposits
remained at the same levels of 30% for demand and call deposits and 15% for
savings and time during the first half of 2025. Reflecting growth in deposits, local
currency statutory reserve balances rose by 37% from ZiG2.89 billion on 16
January 2025 to ZiG3.96 billion as of 30 June 2025.

152.Statutory reserve requirements are one of the instruments in the Reserve Bank’s
monetary policy toolkit as explained in Box 6.

Statutory reserves requirement (SRR) is a prominent policy instrument used by central banks to
support both monetary policy and financial stability. SRR are used to manage liquidity and credit
creation in the banking sector by compelling banks to maintain a proportion of their deposit
liabilities with the central bank.
Critically, as a monetary policy tool, SRRs are used to influence the level of the money supply to
achieve quantitative monetary targets consistent with inflation and growth objectives. For a certain
level of SRR, as the deposit base increases, the amount of liquidity withdrawn through SRRs
increases and when there is a decrease in deposits the reverse happens. When there is an increase
in the deposit base that might threaten price stability, the central bank may increase SRRs to
support monetary policy tightening. The central bank reduces the SRRs to inject liquidity into the
market to support a more accommodative policy stance with a view to boost economic activity in
periods of economic slack.
In addition, by mopping up liquidity, statutory reserves complement the calibration of other
monetary policy instruments such as the policy rate.
SRR can also be deployed as a micro or macro-prudential tool to manage significant build-up of
liquidity in the market which could result in financial imbalances with risks to financial stability.
In this regard, SRR assist in the build-up of liquidity buffers, and smoothening of the credit cycle
to limit financial stress and systemic risk.
Statutory Reserve Requirement Objectives


Source: IMF, 2022
Central banks have implemented SRRs on a uniform or a differential basis. SRRs are differentiated
in terms of tenor and currency composition of deposits. Regarding differentiation on tenor basis,
central banks would impose higher SRRs on demand or call deposits and lower on savings and
time deposits to support long-term savings which are critical to support long-term investment and
sustainable growth.
Currently, Zimbabwe is using a differentiated SRR regime with 30% for demand and call deposits
and 15% for savings and time deposits for both local and foreign currency. The differentiation on
tenor basis creates incentives for banks to change the structure of their deposit liabilities by
attracting long-term deposits, thereby reducing their SRR obligations and supporting long-term
savings in the economy. Banking institutions, therefore, have an option to incentivise depositors
to place funds in time and savings deposits for which SRRs are set at lower levels.
Reserve
Requirements
Quantitative
targeting
Monetary Policy
Prudential
Macroprudential
and Capital Flow
Management
Microprudential
“Taxing” riskier
funding sources
Interest rate
targeting
Smoothing the
credit cycle
Liquidity buffer
Improving
transmission
Managing
structural
liquidity
Box 6: Statutory Reserve Requirements Explained

Statutory reserves requirement (SRR) is a prominent policy instrument used by central banks to
support both monetary policy and financial stability. SRR are used to manage liquidity and credit
creation in the banking sector by compelling banks to maintain a proportion of their deposit
liabilities with the central bank.
Critically, as a monetary policy tool, SRRs are used to influence the level of the money supply to
achieve quantitative monetary targets consistent with inflation and growth objectives. For a certain
level of SRR, as the deposit base increases, the amount of liquidity withdrawn through SRRs
increases and when there is a decrease in deposits the reverse happens. When there is an increase
in the deposit base that might threaten price stability, the central bank may increase SRRs to
support monetary policy tightening. The central bank reduces the SRRs to inject liquidity into the
market to support a more accommodative policy stance with a view to boost economic activity in
periods of economic slack.
In addition, by mopping up liquidity, statutory reserves complement the calibration of other
monetary policy instruments such as the policy rate.
SRR can also be deployed as a micro or macro-prudential tool to manage significant build-up of
liquidity in the market which could result in financial imbalances with risks to financial stability.
In this regard, SRR assist in the build-up of liquidity buffers, and smoothening of the credit cycle
to limit financial stress and systemic risk.
Statutory Reserve Requirement Objectives


Source: IMF, 2022
Central banks have implemented SRRs on a uniform or a differential basis. SRRs are differentiated
in terms of tenor and currency composition of deposits. Regarding differentiation on tenor basis,
central banks would impose higher SRRs on demand or call deposits and lower on savings and
time deposits to support long-term savings which are critical to support long-term investment and
sustainable growth.
Currently, Zimbabwe is using a differentiated SRR regime with 30% for demand and call deposits
and 15% for savings and time deposits for both local and foreign currency. The differentiation on
tenor basis creates incentives for banks to change the structure of their deposit liabilities by
attracting long-term deposits, thereby reducing their SRR obligations and supporting long-term
savings in the economy. Banking institutions, therefore, have an option to incentivise depositors
to place funds in time and savings deposits for which SRRs are set at lower levels.
Reserve
Requirements
Quantitative
targeting
Monetary Policy
Prudential
Macroprudential
and Capital Flow
Management
Microprudential
“Taxing” riskier
funding sources
Interest rate
targeting
Smoothing the
credit cycle
Liquidity buffer
Improving
transmission
Managing
structural
liquidity
Box 6: Statutory Reserve Requirements Explained

Stakeholders have, however, raised concerns that the current SRRs might be on the higher side
and thereby dampening credit growth in the economy. The Reserve Bank’s considered view is that
at 30%, SRRs for demand and call deposits are well calibrated ans in line with experiences for
countries with high inflation and which intend to durably anchor inflation expectations as shown
below.
Statutory Reserve Requirements Country Comparison
Country
Statutory Reserves (%)
Annual Inflation (%)
Domestic Currency
Foreign Currency
Zimbabwe
(call & demand)

92.5 (Jun-25)
Zimbabwe
(savings & time)

92.5 (Jun-25)
Zambia

-
14.1 (Jun-25)
Nigeria

-
22.2 (Jun-25)
Mozambique

29.5
4.15 (Jun-25)
Malawi

3.75
27.1 (Jun-25)
Argentina
40.9
-
39.4 (Jun-25)
Egypt

-
14.9 (Jun-25)
Angola

-
19.7(Jun-25)
Source: Respective Central Bank websites and National Statistical Offices, 2025

While the current statutory reserve requirements might have dampened credit growth in the shortterm, to help sustain low inflation, the Reserve Bank has put in place the Targeted Finance Facility
(TFF) funded from the pool of banks’ statutory reserves, to increase lending to productive sectors
and promote economic growth.
In this context, the Reserve Bank reaffirms its position that the statutory reserve
requirements are currently set at an appropriate level.

Targeted Finance Facility (TFF)

153.The TFF was introduced by the Reserve Bank in January 2025 to support
productive sectors. By end June 2025, total disbursements stood at ZiG420
million, while the outstanding balance was ZiG350.4 million. Figure 26 shows
disbursements under the facility as of 30 June 2025.

Figure 26: TTF Disbursements by sector up to 30 June 2025


Source: RBZ, 2025

154.By the end of June 2025, reflecting repayments made, total outstanding under the
TFF amounted to ZiG349.66 million. The facility proved instrumental,
particularly in supporting key growth-driving sectors within Zimbabwe’s
economy.

155.Disbursements under TFF have been dominated by manufacturing and agricultural
sectors, accounting to 44.82% and 34.73%, respectively.


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Gold and Foreign Currency Reserves
156.The Reserve Bank continued its gold and foreign currency reserves accumulation
to anchor the local currency and meet the targeted import cover of 3 – 6 months.
As a result, international reserves holdings have grown by 37% from about
US$530 million at the end of December 2024 to about US$731 million as of 30
June 2025.

157.The RBZ shall continue to buy gold and build its foreign currency reserves to
provide a solid anchor for the local currency. Figure 27 shows the foreign currency
reserve cover of ZiG reserve money and deposits.

Figure 27 : Foreign Currency Reserve Cover of ZiG Reserve Money and
Deposits

Source: Reserve Bank of Zimbabwe, 2025
158.Reflecting historically high gold prices and the increase in gold output and the
resultant in-kind-royalties, monetary gold dominated the foreign reserves basket
followed by foreign currency nostro deposits. Figure 28 shows developments in
the composition of foreign reserves.

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Figure 28: Composition of Foreign Reserves (US$ million) June 2025

Source: Reserve Bank of Zimbabwe 2025.

Foreign Exchange Market
159.The Reserve Bank continued to play a critical role in the Willing-Buyer-WillingSeller (WBWS) foreign exchange market through interventions to cover legitimate
FX demand not covered by interbank market purchases. The WBWS foreign
exchange market remains key in providing access to foreign currency through a
market-driven and transparent exchange rate system.

160.During the first half of 2025, the Reserve Bank intervened to the tune of US$448.9
million compared with US$407.4 million sold in 2024. The demand for FX will
increase during the second half of the year to cover requirements for the festive
season and preparations for the agricultural season. The supply of FX is also lower
during this time of the year and therefore the central bank will put in place buffers
to cover that demand.

161.The Reserve Bank adopted a floating exchange rate regime, under the WBWS
where banks are free to set their own exchange rates for buying and selling foreign
currency, while the Reserve Bank intervenes to smoothen any volatility in the
market. The trends in WBWS exchange rates indicate a normal pattern of

Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sept-24
Oct-24
Nov-24
Dec-24
Jan-25
Feb-25
Mar-24
Apr-25
May-25
June-25
Monetary Gold
Forex Cash
Deposits (Nostro)
Other

exchange rate movements, providing evidence that the rate is floating, rather than
fixed, and that there is no interference from the Reserve Bank as shown in Figure
29.

Figure 29: Exchange Rate Trends in the WBWS Market

Source: Reserve Bank of Zimbabwe, 2025

162.The WBWS margins have no uniform pattern of spreads suggesting that banks
determine their own rates. The margins as depicted in Figure 30 range from 2.45%
to 11.66%. This shows that the clarification by the Reserve Bank on the initial 5%
margin that was used for the calculation of the opening exchange rate on 8 April
2024, enabled banks to freely price their foreign currency. With increased
competition in the foreign exchange market, the margins should converge towards
levels consistent with international best practice.
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Source: Reserve Bank of Zimbabwe, 2025

Foreign Exchange Policy
163.As part of measures to improve the efficiency of the foreign exchange market, the
Reserve Bank consulted banks on the implementation of the Foreign Exchange
Policy and areas of improvement. The findings of the perception survey are
capture in Box 7.


Foreign Exchange et Open Positions
164.In the context of the multi-currency environment, the effective management of
foreign exchange exposures is a key element in ensuring the maintenance of
financial stability. In this regard, the computation of foreign currency Net Open
Positions is critical for risk management in the banking sector. Box 8 explains the
Reserve Bank’s processes and approaches underway for enhancing the assessment
of foreign exchange Net Open Positions in the market.

The Reserve Bank conducted a Sentiment Survey to assess banks’ perceptions on the service delivery,
processing of applications on foreign exchange transactions and facilitation of foreign trade and
investment. The results of the Sentiment Survey reveal a generally positive perception on the Reserve
Bank, with most respondents expressing satisfaction with the responsiveness, operational effectiveness,
communication on policy and application turnaround times.

The Survey also uncovered the following potential areas for improvement:
(a)
The need for modernisation of the Foreign Exchange regulations;
(b)
The need for improvement on regulatory clarity and discussions on foreign exchange policies
with banks so as to enhance policy implementation success rate;
(c)
Continuous improvement on turnaround times for foreign investment related applications;
(d)
Streamline foreign trade rules, regulations, and procedures to facilitate cross-border trade;
(e)
Promulgate regulations that improve cross-border trade environment for small and mediumsized enterprises (SMEs);
(f)
Identify and publish investment opportunities within the supply and value chains along priority
economic corridors;
(g)
Improve public–private sector trade and investment promotion initiatives. Joint trade and
investment promotion initiatives with banks and Government Agencies such as Zimtrade and
Zimbabwe Investment and Development Agency (ZIDA); and
(h)
Enhanced collaboration between the Reserve Bank, Zimbabwe Revenue Authority (ZIMRA)
and banks on facilitation of trade, as well as automation of the processes.
Box 7: Feedback on the conduct of Foreign Exchange Transactions in the Market

Following the issuance of revised NOP guidance in May 2025 to the market, the Reserve Bank
noted computational gaps which necessitated re-orientation and training to promote the provision
of high data quality and consistency on banks’ foreign exchange risk management.
The Reserve Bank has since initiated the process of assessing risk mitigatory characteristics of
banks’ structural positions against the qualifying criteria in line with Banking Regulations and
international practices.
Structural positions are considered for deduction from NOP when the meet the following criteria:
a) investments in affiliated but not consolidated entities denominated in foreign currencies;
b) investments in consolidated subsidiaries or branches denominated in foreign currencies.
c) The exclusion from the calculation is made for at least six months;
d) The establishment of a structural FX position and any changes in its position must follow
the bank’s risk management policy for structural FX positions.
e) Exclusions of the risk position needs to be applied consistently, with the exclusionary
treatment of the hedge remaining in place for the life of the assets or other items;
f) Supervisory review of documentation relating to positions and amounts to be excluded
from market risk capital requirements;
g) Long-term debt – foreign currency denominated debt that is used to finance operations;
h) Non-monetary items – such as property, plant and equipment that are recorded at historical
cost and not revalued regularly; and
i) Other approved regulatory deductions.
The strategic hedging of capital adequacy ratios reduces exposure to foreign currency risks,
supports strong banking sector balance sheets and promotes financial stability

Box 8: Calculation of Banking Sector Foreign Currency et Open Positions (OPs)

Key Monetary and Financial Indicators
165.Key monetary and financial conditions indicators on quarterly basis for period
April 2024 to June 2025 are shown in Table 11.
Table 11: Key Monetary and Financial Statistics

30-Apr-24
30-Jun-24
30-Sep-24
31-Dec-24
31-Mar-25
30-Jun-25
Inflation


ZiG Month-on-Month (%)

ZiG Annual inflation


-
-
92.5
USD Month-on-Month (%)

USD Annual (%)

Monetary


Reserve Money (ZiG Million)


Total ZiG Deposits – (Million)

Foreign Reserves Cover for ZiG
(ZiG Million)

Financial Sector


Non-Performing Loans Ratio
(Benchmark=5%)
N/A8

Money Market


Market Position (ZiG Million)

External Sector


Cash and Nostro Balances (US$
Million)

Gold Holdings Kgs

Gold Holdings Value (USD
Million)

Other Reserves (In kind mineral
royalties)

Total Reserve Covering ZiG
(USD Million)

Average Pipeline Forex Demand
(USD Million)

WBWS Exchange Rate

Implied Exchange Rate (ZiG
Bank Deposits- over Foreign
Currency Reserves)

Source: Reserve Bank of Zimbabwe, 2025


8 N/A= Data not available monthly but quarterly.

SECTIO SIX
MOETARY POLICY MEASURES

MOETARY POLICY THRUST OF THE RESERVE BAK

166.In line with the need to ensure that there is policy consistency as the Reserve Bank
continues to walk the talk, this Mid-Term Monetary Policy Review Statement
restates previously announced measures and introduces complementary measures
to buttress and provide further clarity. The measures are, therefore, designed to
durably anchor and consolidate the prevailing exchange rate and price stability
by addressing emerging risks and continue to shape inflation expectations.

Monetary Policy Framework
167.In 2024, the Reserve Bank’s “Back-to-Basics” thrust recalibrated its monetary
policy framework to focus on price stability as the sole monetary policy objective.
As such, the Reserve Bank will continue to implement measures to ensure that
through prudent monetary policy management, the country achieves and
maintains price stability without undermining economic growth.

168.In light of the above, the Reserve Bank is controlling reserve money as the
operational target to stabilise the ZiG/US$ exchange rate, which is the
intermediate target or the nominal anchor. The stability of the exchange rate is
expected to result in low and stable prices, which is the ultimate objective of the
Reserve Bank’s monetary policy.

169.In this regard, the Reserve Bank will stay the course of the current tight monetary
policy stance, while remaining flexible to signals informed by incoming data on
inflation, exchange rate, economic activity and other key macroeconomic
fundamentals.

Monetary Policy Stance
170.The current tight monetary policy stance has been informed by the need to address
previous episodes of exchange rate and inflation volatility and durably entrench
price stability. Precisely, the Monetary Policy Framework was calibrated to
underpin the disinflation program and support the convergence of annual inflation
towards the regional benchmarks.

171.Similar to disinflation programs from other country experiences, the Reserve
Bank’s current tight monetary policy stance takes into account the country’s
peculiar macroeconomic circumstances and past experiences. In Zimbabwe,
“inflation has largely been a monetary phenomenon”. As such, the current
monetary program considers the historical hyperinflation episodes (hysteresis),
high dollarisation and the need to address the confidence and trust deficit in the
economy. Other country experiences have demonstrated that in highly dollarised
economies, prices are more responsive to fluctuations in the exchange rate.

172.In light of the above, the Reserve Bank is controlling reserve money as the
operational target to stabilise the ZiG/US$ exchange rate which is the intermediate
target or the nominal anchor. The stability of the exchange rate is expected to result
in low and stable prices which is the ultimate objective of monetary policy. For
the avoidance of doubt, the Reserve Bank is not using the exchange rate as
the operational target and therefore, does not interfere in the foreign
exchange market. The Reserve Bank is using a market determined floating
exchange rate and is only influencing its movement through ensuring prudent
management of reserve money.

173.The combination of optimal control of money supply and a market-determined
exchange rate will support the narrowing of the parallel market premium, thereby
supporting lasting stability of prices.

(a)
Fiscal and Monetary Policy Coordination

174.The current monetary policy stance has benefited from complementary fiscal
policy measures. Consequently, there has not been any recourse to central bank
financing by the Treasury which provided further impetus to the Reserve Bank’s
efforts to curtail monetary growth and bring inflation under control.

175.The implementation of the 50:50 basis in terms of local and foreign currency for
settlement of Quarterly Payment Dates (QPDs) has gone a long way in increasing
the demand for ZiG. The requirement will result in economic agents increasing
their sales in local currency in order to have adequate funds to settle QPDs.

176.The Reserve Bank, in its Advisory role, will continue to engage Government to
address specific potential fiscal risks to macroeconomic stability raised by
stakeholders during the Monetary Policy Consultations.

MOETARY POLICY MEASURES

(a)
Interest rates
i.
Bank Policy Rate
177.During the Reserve Bank’s consultations with stakeholders on monetary policy
implementation, the current Bank Policy rate at 35% was said to be too high. The
stakeholders proposed a downward review of the policy rate.

178.The current Bank Policy rate, together with other measures, have been critical in
supporting the prevailing price, currency and exchange rate stability. Precisely, the
Policy rate has managed to stem speculative borrowing and ensured that credit is
channelled towards the productive sectors of the economy. The Reserve Bank
reaffirms that the current Bank Policy rate is well calibrated based on inflation and
output dynamics. The Reserve Bank projects inflation to end the year at around
30%, giving positive real interest rate of 5%, which is consistent with the natural
rate observed in other countries (Box 5). Accordingly, the Bank Policy Rate has

been maintained at 35% and will continue to be reviewed by the Monetary Policy
Committee (MPC) in line with obtaining fundamentals.

179.Given the high annual inflation and the need to anchor inflation expectations, the
current bank policy rate at 35% is assessed to be still appropriate, and supportive
of stability and growth. The recent country disinflation experiences have shown
that, to durably anchor inflation expectations, it would be appropriate to reduce
policy rates when inflation has gone below the policy rate in order to foster the
optimal level of positive real interest rates. This is also based on experience that
inflation expectations are mainly backward looking and adaptive and based on
current and previous annual inflation trends in the context of high inflation.

180.Going forward, the Monetary Policy Committee will continuously review and
adjust the Bank Policy rate appropriately in line with the evolution of risks
to inflation and growth.

ii.
Minimum Deposit Interest Rates and Promotion of a Savings Culture
181.Reflecting the current level of the benchmark interest rate, minimum interest rates
for savings and time deposits in both ZiG and USD have been maintained, as
follows:
Currency/Term
Savings Deposit Rates
Time Deposit Rates
ZiG Deposits
5%
7.5%
USD Deposits
2.5%
4%

(b)
Bank and Transaction Charges
182.Further, stakeholders indicated that bank charges are too high thereby increasing
transactional costs through the formal banking system which promotes
disintermediation of banks and informalisation of the economy. Banks are required
to adhere to the measures announced in the February 2025 Monetary Policy
Statement restated as follows; to exempt from bank charges, all accounts that
maintain a balance below US$100 or its equivalent in ZiG. In addition, Point of

Sale (POS) transactions for amounts less than US$5 or its equivalent in ZiG are
also exempted from transaction charges, for both banking institutions and
Payment System Providers (PSPs).

183.Also, in an effort to curb informalisation, banks are reminded to ensure that
all business account holders are provided with POS machines.

184.The Reserve Bank continues to urge the Bankers Association of Zimbabwe
(BAZ) to reduce their bank charges to ensure affordability of banking
services to the public.

185.In addition, the Reserve Bank strongly urges banks and PSPs to embrace
digitalisation to enhance their operational efficiency and pass-on to
consumers the gains of reduced costs.

(c)
Statutory Reserves
186.Stakeholders called for the reduction in statutory reserve requirements in both
USD and ZiG in order to boost banks’ lending capacity to their clients.

187.The Reserve Bank has used statutory reserves as one of its monetary policy tools
to mop-up excess liquidity from the market, which has been key in supporting the
obtaining price stability. The current statutory reserve requirements are set
between 15% and 30% depending on the nature of the deposits. Banking
institutions can, therefore, easily reduce the effective statutory reserve
requirements towards 15% by attracting more long-term deposits.

188.The current differentiated statutory reserve requirements is supportive of
deepening the money market, promoting long-term savings and engendering
greater financial stability. The statutory reserve ratios, therefore, remain
unchanged and will be reviewed when appropriate and consistent with the
monetary policy thrust.

(d)
The Targeted Finance Facility (TFF) and Access to WBWS
Interbank Foreign Exchange Market
189.Stakeholders acknowledged that TFF is a positive initiative and underscored the
need for extending the financing to companies involved in the supply value chains
and enhancing lending conditions for long term funding.

190.The Reserve Bank introduced the Targeted Finance Facility (TFF) financed from
the pool of banks’ statutory reserves held at the Reserve Bank to ensure continued
flow of credit to productive sectors. TFF has gone a long way in supporting the
productive sectors of the economy particularly agriculture, manufacturing and
wholesale and retail. TFF will continue to be availed exclusively to productive
sectors of the economy, with the exception of the retail sector.

191.It is also pertinent to note that the money market has maintained persistent daily
long position, indicating that there is adequate liquidity available for lending.
Banks are, therefore, encouraged to set trading limits for each other to avoid
concentration of liquidity in a few banks and make lending available to other
economic agents. In this regard, the Reserve Bank encourages value chain
suppliers to access bridging finance from their bankers.

(e)
Exporters’ Foreign Currency Retention Threshold
192.The foreign currency retention level for exporters has been maintained at 70% and
will be reviewed in line with the de-dollarisation road-map, which will be
informed by the forthcoming National Development Strategy II (NDS2) blueprint.
This means that the export surrender requirement, which is currently at
30%, is maintained.

(f)
Recalibrated CDs
193.The Reserve Bank remains committed to maintaining a tight monetary policy
stance while working towards correcting existing market imbalances, market
segmentation, and limited interbank trading. To support the reserve money
targeting framework and bolster the monetary policy toolkit, the Reserve Bank
attaches a premium on the transition from direct to indirect monetary policy
instruments.

194.As part of the transition process to indirect monetary policy instruments, in
May 2025, the Reserve Bank recalibrated CDs to ensure that they are nonredeemable (except for payments of taxes and purchase of foreign currency),
non-transferable and for a fixed tenor of 30 days, with zero coupon.

195.As market conditions become favourable and banks have sufficient incentives to
compete for market liquidity, the Reserve Bank will fully transition to the use of
indirect monetary policy instruments, including remuneration of NNCDs. Under
these conditions, banks will only approach the Central Bank for overnight
accommodation as a last resort.


(g)
ZiG Cash Availability and Usage
196. Stakeholders also urged the Reserve Bank to implement additional measures to
increase acceptance and uptake of ZiG in the market.

197.The improved macroeconomic stability has seen increased usage of ZiG as
reflected by the rise in the proportion of electronic ZiG in the National Payments
System from 26% in April 2024 to over 40% in June 2025. The increase in the
usage of ZiG has also been accompanied by an increase in the demand for ZiG
cash. The Reserve Bank has been ensuring issuance of ZiG in line with optimal
requirements in the market. In this regard, the Reserve Bank has been working
with banking institutions to ensure that at least 3% of their ZiG deposits

(regional optimal benchmark for cash-in-circulation against deposits) are
held and available for distribution as cash.

198.To enhance distribution of ZiG cash, the Reserve Bank has directed banking
institutions to increase access of ZiG through Automated Teller Machines
(ATMs) and banking halls. The Reserve Bank will ensure that banking
institutions that have not already started distributing ZiG cash through ATMs have
done so by end of September 2025. Currently, the banking sector is holding in
their vaults a total of over ZiG200 million in cash awaiting distribution to banking
clients in need.

199.As advised in the February 2025 Monetary Policy Statement, the Reserve
Bank is working to modernise the current ZiG banknotes. The Reserve Bank
further advises that the re-design and production process of the improved
ZiG banknotes is progressing very well and is at an advanced stage. The
public will be advised of the expected roll-out at the appropriate time.

(h)
De-Dollarisation Roadmap
200.The need for a clear de-dollarisation roadmap was one of the most prominent
issues that came out during the Mid-Term Monetary Policy Review stakeholder
consultations. Specifically, the stakeholders raised concerns that all contracts in
USD including bank loans are now capped or limited to 2030. Stakeholders also
relayed fears and concerns pertaining to the fate of their foreign currency deposits
at the end of the multicurrency system in 2030.

201.The de-dollarisation roadmap will be crystalised in the National Development
Strategy II and the Reserve Bank which is chairing the NDS2 Thematic Working
Group on Macroeconomic Stability and Financial Deepening (MESFIND) is
currently seized with consultations on the issue. The roadmap will undoubtedly
encapsulate the need to maintain the current stability, preserve the foreign
currency accounts and the existing USD denominated contracts.

Consideration will always be made to ensure that there is business continuity and
certainty.

(i)
Foreign Currency Interbank Trading Margins
202.Stakeholders consulted by the Reserve Bank during the Mid-Term Monetary
Policy Review bemoaned the increase in foreign currency trading margins
following the clarity on the 5% trading margin in the February 2025 Monetary
Policy Statement. The Reserve Bank is urging Authorised Dealers to stick to
international best practice regarding the application of foreign exchange
trading margins.

OTHER MOETARY POLICY SUPPORT MEASURES

(j)
Compliance with Trade and Investment Regulations
203.The Reserve Bank of Zimbabwe has observed recurring incidences of noncompliance with Exchange Control rules and regulations by Authorised Dealers,
Authorised Dealers with Limited Authority (ADLAs), corporates and individuals.
These incidents, which contravene the established regulatory framework,
undermine the conduct of trade and investment transactions and compromise the
integrity of the financial sector. Prevalent and notable violations include, but are
not limited to, the following:
i.
Non-acquittal of export and import documentation within prescribed
timelines;
ii.
Non-application of liquidation requirements on export receipts within
prescribed timelines;
iii.
Falsification of export and import documentation to facilitate irregular
exports and imports;
iv.
Non-registration of external loans and other service agreements;
v.
Establishment of cross-border investments without prior authorisation by the
Reserve Bank;
vi.
Under declaration of exports and over-pricing of imports;

vii.
Non-reporting and non-submission of statutory returns on approved trade and
investment transactions;
viii.
Masking of borrowed funds through multiple bank transfers culminating in
the abuse of the willing buyer-willing seller foreign exchange interbank
market.
ix.
Wrong classification and coding of trade and investment transactions, which
distorts data accuracy and integrity.
x.
Failure to conduct prudential analysis of the client’s supporting
documentation for accessing foreign currency on the Willing-Buyer WillingSeller (WBWS) foreign exchange interbank market, resulting in ‘double
dipping’ and payments not supported by Bonafide invoices and/or shipping
documents.

204.To foster a culture of compliance and uphold the foreign exchange rules and
regulations that govern trade and investment transactions, the Reserve Bank has
revised the penalty fees for non-compliance upwards to 1% of the transaction
amount or one hundred thousand United States dollars (US$100,000.00 or
ZiG equivalent), whichever is greater or suspension or revocation of foreign
exchange trading licence.

205.Authorised Dealers, Authorised Dealers with Limited Authority and Corporates
are, therefore, required to put in place adequate internal control systems to ensure
compliance with foreign exchange rules and regulations. Acts of non-compliance
will not be tolerated.


(k)
Currency Discrimination in Pricing of Goods and Services
206. During Monetary Policy consultations, stakeholders raised concerns over
discriminatory practices against ZiG payments for goods and services. These
malpractices include inflated prices for ZiG, outright rejection of payment in ZiG,
false claims of system outages for POS and goods stock-outs when one intends to

pay in ZiG. They highlighted that the practice was more prevalent in the case of
airtime purchases.

207.Specifically, stakeholders complained that it was difficult to transact in ZiG when
purchasing airtime from some service providers in local currency but it becomes
much easier when transacting in USD.

208.In the February 2025 Monetary Policy Statement, the Reserve Bank urged these
service providers and other economic agents to ensure that goods and services are
equally and easily available in both ZiG and USD. The Reserve Bank further reemphasises that mobile network operators and other traders take heed of the
call by the Bank to ensure fair trading practices in line with the multicurrency system. The Financial Intelligence Unit (FIU) will, henceforth, monitor
compliance in this respect and those found to be non-compliant will be penalised
accordingly.

(l)
Sustainability and Climate Risk Management
209.As part of ongoing national initiatives to accelerate the implementation of
sustainability disclosure standards issued by the International Sustainability
Standards Board (ISSB), the Reserve Bank will be conducting a survey to assess
the banking sector’s preparedness.

210.In line with the requirements of International Financial Reporting Standards S1
and S2, entities, including banking institutions, will be required to disclose
information on sustainability and climate-related risks and opportunities,
governance and risk management systems.

211.The thrust towards compliance with ISSB disclosure requirements follows early
adoption of the standards by Government of Zimbabwe in 2021.

(m)
Gender diversity and Inclusion
212.Fostering gender diversity, as well as promoting inclusivity remains an important
aspect of the National Financial Inclusion Strategy II. In view of the need to
improve the proportion of women and people with disabilities in leadership
positions within the financial sector, all banking institutions and microfinance
institutions are required to submit to the Reserve Bank, their roadmap towards
gender equality and inclusion of Persons with Disabilities in decision-making roles
by 31 December 2025.

(n)
Financial Literacy
213.The Reserve Bank will increase its financial literacy outreach programs through
various channels to ensure that communities in rural areas and marginalised areas
are informed about monetary policy and financial inclusion initiatives. Further,
effective 31 December 2025, all banking institutions and microfinance institutions
are required to provide quarterly updates on their financial literacy outreach
programs to the rural communities.

SECTIO SEVE
ECOOMIC AD IFLATIO OUTLOOK

214.The monetary policy measures outlined above are expected to support the
continued consolidation of exchange rate and price stability. Sustained
macroeconomic stability is critical for the economy to realise its growth potential
in the short to medium term.

Inflation Outlook
215.The Reserve Bank remains committed to achieving lasting price stability by
ensuring that it continues to “walk the talk” of prudent money supply management
under the reserve money targeting framework. In this regard, monthly inflation is
expected to remain low and stable between 1 and 3% supporting an end-of-year
annual inflation of below 30%.

Balance of Payments Outlook
216.In line with increased foreign currency inflows during the first half of 2025, the
country's current account balance is expected to improve from a surplus of
US$501.2 million in 2024 to a surplus of US$621.7 million in 2025. The
projected surplus will continue to be supported by improvements in merchandise
exports and remittances.

SECTIO EIGHT
COCLUSIO

217.The current monetary policy stance pursed in the first half of 2025 has proved
effective in anchoring inflation and exchange rate expectations and the
Reserve Bank will stay the course to create a track record of sound
monetary policy implementation, which is critical for fostering confidence,
trust and central bank credibility.

218.The favourable output growth from the strong recovery in the agriculture and
mining sectors will go a long way in supporting the recovery in aggregate
demand witnessed during the first half of 2025 and provide greater scope for
monetary measures to support the current disinflation programme.

AEX
SUMMARY OF STAKEHOLDER COSULTATIOS O MOETARY
POLICY IMPLEMETATIO

1. The Reserve Bank has continued to adopt a listening and consultative approach to
formulating monetary policy as part of building central bank policy credibility,
confidence and trust. In this regard, the Reserve Bank held Stakeholder Consultative
meetings from 7-14 July 2025 to solicit feedback on the impact of the current
monetary policy on businesses and economic agents and recommendations for the
forthcoming Mid-Term Monetary Policy Review. Stakeholder consultations are
critical to support the effectiveness of monetary policy by ensuring that policy
measures remain responsive to the needs of the economic agents.

2. The MPS stakeholder meetings were attended by key stakeholders, cutting across
the various sectors of the economy, which include:

i.
Zimbabwe National Chamber of Commerce (ZNCC);
ii.
Commercial Farmers Union and Zimbabwe Farmers Union (CFU and ZFU);
iii.
CEO Africa Roundtable;
iv.
Zimbabwe Council of Churches (ZCC);
v.
Zimbabwe Tourism Authority (ZTA);
vi.
Consumer Council of Zimbabwe (CCZ);
vii.
Capital Markets Council (CMC);
viii.
Confederation of Zimbabwe Industries (CZI);
ix.
Chamber of Mines;
x.
Confederation of Zimbabwe Retailers (CZR);
xi.
Estate Agents Council (EAC);
xii.
Bankers Association of Zimbabwe (BAZ);
xiii.
Retailers Association of Zimbabwe (RAZ); and
xiv.
Various Economic Commentators and Business Analysts.

3. Generally, the stakeholders acknowledged and commended the obtaining relative
macroeconomic stability prevailing as evidenced by low inflation and stable

exchange rate. However, some stakeholders were concerned that the stability could
be temporary due to Government delays in the settlement of obligations to suppliers
and contractors.

4. Stakeholders, however, expressed concern over the following issues bedevilling the
economy that requires the attention of authorities. These issues are highlighted in
Tables 1 and 2.

Table 1: Summary of Stakeholders Issues and Comments

Subject
Matter
Stakeholder Comments and Issues
RBZ Feedback
1 Dedollarisation
by 2030
Government
should
provide
clear
direction and assurance possibly anchored
in legislation that foreign currency
deposits
held
within
the
domestic
financial system will retain its foreign
currency status post multi-currency era
The RBZ allayed the stakeholders’ fears and
advised that a roadmap will be provided in the
upcoming NDS 2. The roadmap will, however,
encapsulate the need to maintain the current macro
stability, preserve the foreign currency accounts
and avoid loss of value of the existing US$
denominated contracts.
2 Interest Rate
Interest rates on ZiG loans could be high
and there may be need a to reconsider the
rates, starting with a review of the 35%
Bank Policy Rate as it influences other
lending rates in the banking sector.
The Bank reaffirms that the current Bank policy
rate is well calibrated based on inflation and output
dynamics. The Bank projects inflation to end the
year at 30%, giving positive real interest rate of
5%, which is consistent with the natural rate
observed in other emerging and developing
countries. The policy rate will continue to be
reviewed by the MPC in line with obtaining
fundamentals.
3 Targeted
Finance
Facility
Stakeholders acknowledged that TFF is a
positive initiative, however, there is need
for opening up TFF window to companies
involved in the supply value chains and
enhance lending conditions for long-term
funding
The RBZ acknowledges the need for funding for
value chain bridging finance. However, the market
is currently in surplus, which can fund their
requirements (gap).
4 Currency
Discriminatio
n by Mobile
Money
Operators
Stakeholders highlighted that it is difficult
to transact in ZiG when purchasing
services from Mobile Money Operators.
However, it becomes much easier when
transacting in USD.
The Reserve Bank will engage Mobile Money
Operators to ensure that there is equal trading in
both domestic and foreign currencies in line with
the multicurrency system.
5 High Bank
Charges
Stakeholders indicated that bank charges
are too high thereby increasing the cost of
trading through the formal banking
system.
Through moral suasion, the Reserve Bank
continues to urge the BAZ to review their pricing
policies.
6 Foreign
Exchange
Market
Stakeholders
recommended
the
introduction of a cap on the margin in the
WBWS interbank market to ensure that
the private sector can access foreign
currency at fair rates
The Reserve Bank envisages that the actions being
taken to deepen the foreign exchange market will
go a long way to strengthen competition with the
effect of narrowing the trading margins.
7 Availability
and usage of
ZiG
Implement measures to increase adoption
and uptake of ZiG in the market.
ZiG cash is available at banks and the Reserve
Bank has directed banks to ensure that they pick up
their ZiG cash entitlements so that they have
optimal holdings to issue to their client, at all times.

Subject
Matter
Stakeholder Comments and Issues
RBZ Feedback
ZiG usage will increase in line with the dedollarization roadmap that will be formulated in
the NDS2 Framework.
8 Fiscal Matters
Stakeholders raised concerns regarding
fiscal risks to the prevailing stability.
The Reserve Bank and Treasury have been
working closely to ensure monetary policy and
fiscal policy complementarity.

The Reserve Bank, in its Advisory role, will
continue to engage Government to address specific
potential risks to macroeconomic stability raised
by stakeholders.

Table 2: Summary of Stakeholders Comments

Subject Matter
Stakeholder Comments
RBZ Feedback

Effective
Communication
Stakeholders
commended
the
Reserve Bank for its inclusive and
consultative
approach
to
monetary
policy
formulation.
Stakeholders
viewed
this
participatory approach as an
important tool to ensure the
relevance of monetary policy
measures
in
addressing
the
challenges confronting various
sectors of the economy.
Communication has become an integral component
of modern monetary policy management. The
Reserve Bank has, therefore, adopted communication
as part of its monetary policy toolkit as it also helps
to shape expectations, enhance transparency and
increase the effectiveness of monetary policy itself.

A monetary policy statement that benefits from
stakeholder
consultation and
inclusiveness is
expected to anchor market expectations and yield the
mutually desired outcomes.

Price and exchange
rate stability
Stakeholders
commended
the
Reserve Bank and Government
for the stability obtaining in the
economy and urged them to stay
the course of the current policy
stance.
The Reserve Bank remains committed to staying the
course of the current tight monetary policy stance
which has resulted in stability in the economy. Going
forward, the Reserve Bank will ensure prudent
money supply management for effective exchange
rate and inflation control.

Access to foreign
exchange
Stakeholders acknowledged the
availability and timely settlement
of invoices for foreign payments
on the willing-buyer willing seller
foreign
exchange
interbank
market.
The Reserve Bank will continue to build foreign
reserves to regional and international standards to
create a sufficient buffer to cushion the country
against any external shocks that may threaten ZiG
stability.

The Reserve Bank urges all holders of bonafide
foreign payments invoices to approach their banks
through the WBWS interbank market to access
foreign exchange for their transactions and avoid the
illegal parallel market. The Reserve Bank has taken
bold steps to ensure that foreign exchange will always
be available in the WBWS interbank market for
bonafide external payments.

Targeted Finance
Facility (TFF)
The stakeholders appreciated the
establishment of the TFF, which
assisted in augmenting credit
availability
and
bolstered
productive sector activities.
The Reserve Bank noted the temporary liquidity
challenges which were affecting production and
hence established the TFF to bridge the funding gap.

However, the Reserve Bank is still concerned about
the low utilization of the facility and encourages
corporates to approach their bankers to access the
financing facility.

Policy Consistency
Stakeholders
welcomed
the
implementation
of
consistent
monetary
policy
measures
(walking the talk) that continue to
send positive signals to the
market.
The Reserve Bank reaffirms its commitment and
believes that confidence and trust are earned from
consistent central bank policy actions. Reserve Bank
policy credibility and transparency are also envisaged
to form the right expectations and establish a
predictable positive trajectory.

ED