HARARE – Zimbabwe’s Reserve Bank (RBZ) expects inflation to continue declining into single-digit territory by the first quarter of 2026, as authorities intensify efforts to stabilise the exchange rate, build foreign-currency reserves and strengthen coordination between monetary and fiscal policy.
In an interview with the Zimbabwe Independent, RBZ Governor John Mushayavanhu outlined the central bank’s macroeconomic outlook, quantitative targets and policy priorities as the country navigates a disinflation phase and seeks to consolidate financial sector stability ahead of 2026.
Mushayavanhu said the RBZ’s updated inflation projections would be formally presented in the February 2026 Monetary Policy Statement, adding that the official forecast currently remains aligned with targets set out in the 2026 National Budget. He expressed confidence that the downward trend in inflation would be sustained, supported by tighter monetary conditions and exchange-rate stability.
On the foreign-exchange market, the governor said reforms under the Willing Buyer Willing Seller system had significantly improved liquidity and price discovery. He noted that enhanced market participation and strategic RBZ interventions had reduced exchange-rate volatility to below 5% in 2025, a sharp improvement from volatility levels exceeding 50% in 2024.
Under the National Development Strategy 2 (NDS2), the central bank is targeting exchange-rate variability of plus or minus 15% in the near term, narrowing to plus or minus 10% in the medium term in line with regional benchmarks set by the Southern African Development Community and the Association of African Central Banks.
To support exchange-rate stability, the RBZ has accelerated foreign-reserve accumulation. Mushayavanhu said usable foreign-currency reserves had risen from US$276 million in April 2024 to over US$1 billion by the end of November 2025, equivalent to more than 1.2 months of import cover. The medium- to long-term objective is to reach between three and six months of import cover, consistent with international norms.
Zimbabwe’s foreign-currency inflows have also strengthened. Total foreign receipts rose by 21% to US$13.1 billion in the ten months to October 2025, compared with US$10.8 billion during the same period in 2024, reflecting improved export performance and diaspora remittances.
Mushayavanhu said export surrender requirements had played a key role in stabilising the foreign-exchange market. Of the 30% surrender, 12.5% is allocated to government for external debt servicing, another 12.5% is purchased by the RBZ to support the interbank market, while the remaining 5% is directed towards reserve accumulation. Using these resources, the RBZ has intervened with more than US$900 million to ensure market clearance and meet legitimate foreign-payment demands.
The banking sector, he said, remains sound, with non-performing loans contained at 3.07%, well below the international benchmark of 5%. The governor also noted that Zimbabwe has entered a phase of positive real interest rates, with inflation now below the policy rate. As of late 2025, the real interest rate stood at about 16%, a trend the RBZ expects to maintain as inflation continues to fall.
Zimbabwe’s payments system has become overwhelmingly digital, with electronic transactions accounting for about 94% of all national payment system activity by October 2025. Physical cash in circulation stood at ZiG508.75 million as at December 9, 2025—around 3% of broad money—below the 5% target ratio set for 2026.
On fiscal–monetary coordination, Mushayavanhu said the government has not borrowed from the central bank since April 2024, a policy stance expected to continue in 2026. While current law allows central bank financing of up to 20% of the previous year’s revenues, the NDS2 envisages reducing this limit to 5% or less, bringing Zimbabwe into line with regional best practice.
The RBZ governor said the combination of disinflation, reserve accumulation, exchange-rate stability and disciplined fiscal coordination was critical to restoring confidence and laying the foundation for sustainable economic growth.
