Zimbabwe is earning foreign currency at levels that would ordinarily signal a turning point in macroeconomic stability. In 2025, the country generated an estimated US$16.2 billion in foreign exchange receipts, a sharp increase from US$13.3 billion in 2024.
By Brighton Musonza
The improvement has been driven primarily by elevated global gold prices, alongside steady mineral exports and a degree of recovery in agricultural output. On paper, this performance suggests an economy that is increasingly integrated into global commodity markets and capable of generating hard currency at scale.
Yet the strength of inflows masks a more troubling reality. Despite record foreign exchange earnings, Zimbabwe remains critically under-reserved. Official foreign exchange reserves stand at approximately US$1.2 billion, sufficient to cover only about one and a half months of imports. Even when gold holdings are added, total reserves remain thin by regional and international standards. As recently as December 2024, Zimbabwe’s total reserves foreign currency plus gold were just US$472 million, underscoring how shallow the reserve base has been and how far the country still is from reserve adequacy.
This gap between inflows and buffers lies at the heart of Zimbabwe’s recurring monetary instability. Economies do not achieve external resilience simply by earning foreign exchange; they do so by retaining, pooling and credibly managing it. In Zimbabwe’s case, foreign currency continues to flow through the economy rather than accumulate within it.
Under widely accepted International Monetary Fund prudential benchmarks, countries are expected to hold reserves equivalent to at least three months of import cover in order to cushion against external shocks, commodity price volatility, capital flow reversals and balance-of-payments disruptions. For economies with a narrow export base, high import dependence and weak monetary credibility, the appropriate reserve threshold is often considerably higher. Zimbabwe falls squarely into this category.
With an average monthly import bill estimated at between US$750 million and US$800 million, the minimum three-month benchmark implies reserve holdings of roughly US$2.4 to US$2.5 billion. At current levels, Zimbabwe is barely halfway to this floor. More importantly, even meeting the minimum benchmark would do little to change market psychology in an economy shaped by repeated episodes of currency erosion and policy reversals. What markets, businesses and households respond to is not minimum compliance, but credible excess capacity.
The structure of Zimbabwe’s economy amplifies this vulnerability. The country is structurally import-intensive, relying heavily on foreign currency for fuel, electricity, medicines, fertilisers, industrial machinery, spare parts and consumer goods. Domestic production remains constrained by infrastructure deficits, power shortages and limited access to long-term capital. As a result, any disruption to forex availability transmits quickly into inflationary pressure, supply bottlenecks and exchange-rate instability.
It is against this backdrop that recent efforts to rebuild reserves through gold accumulation must be understood. In 2022, authorities introduced legislation compelling mining companies to remit a portion of their royalties in physical gold rather than cash. The policy was designed to rebuild strategic reserves, reduce leakages and anchor monetary credibility in a tangible asset. Since then, gold holdings have risen to approximately four tonnes, up from 2.6 tonnes in December 2024. This represents meaningful progress and reflects improved formalisation of mineral flows at a time of favourable global prices.
However, gold accumulation, while symbolically important, cannot substitute for liquid foreign exchange reserves. Gold is inherently less flexible in times of stress. It must be monetised, transported or pledged, often at a cost and with time lags that are incompatible with fast-moving balance-of-payments pressures. Moreover, reliance on gold exposes reserves to commodity price volatility, undermining predictability. For import cover and market stabilisation purposes, usable foreign currency remains the binding constraint.
This constraint has been most evident in the management of the Zimbabwe Gold (ZiG) currency. Since its introduction, the ZiG has required sustained support from the Reserve Bank of Zimbabwe to maintain exchange-rate stability and market confidence. Between April 2024 and the present, the central bank has injected approximately US$1.34 billion into the market to meet foreign exchange demand, smooth volatility and defend the currency’s value.
While such interventions have prevented disorderly market conditions, they highlight a fundamental policy trade-off. Every dollar deployed to support the currency is a dollar that cannot be added to reserves. When interventions become persistent rather than exceptional, reserve accumulation is crowded out, leaving the monetary system dependent on continuous inflows rather than accumulated buffers. This dynamic creates a fragile equilibrium in which stability is maintained only so long as inflows remain strong.
The deeper issue is that Zimbabwe’s foreign exchange earnings are being absorbed by structural leakages before they can be transformed into national savings. High import demand, offshore retention of export proceeds, informal market activity, external debt obligations and quasi-fiscal operations all drain inflows. Compounding this is a long-standing confidence deficit. Economic agents, shaped by past currency collapses, have strong incentives to externalise or self-insure rather than surrender or hold foreign currency within the domestic system.
This behaviour is rational, not malicious. In environments where policy predictability is weak and monetary regimes are frequently adjusted, economic actors prioritise liquidity and capital preservation over compliance. As a result, reserve accumulation becomes a residual outcome rather than an explicit policy anchor.
For Zimbabwe to break this cycle, reserve accumulation must be elevated from a technical objective to a central pillar of macroeconomic strategy. Achieving basic external stability would require at least a doubling of current reserves to reach the minimum three-month import cover threshold. But for a country contemplating a durable single-currency framework and seeking to re-anchor expectations, this would still be insufficient.
A more credible reserve position would likely require holdings in the range of US$5 to US$6 billion, equivalent to roughly five to six months of import cover. Such a buffer would materially reduce exchange-rate pressure, lower risk premiums, and allow the central bank to intervene selectively rather than defensively. It would also signal a decisive break from crisis management towards precautionary macroeconomic governance.
Crucially, higher reserves alone will not deliver stability unless accompanied by disciplined fiscal and monetary policy. Leakages must be systematically closed, quasi-fiscal operations curtailed, surrender requirements made transparent and predictable, and exchange-rate policy aligned with fundamentals. Without these reforms, higher inflows will continue to dissipate through the system, leaving reserves perpetually lagging.
Zimbabwe’s current position is therefore best described as one of missed consolidation rather than outright failure. The country is generating foreign exchange at record levels, yet remains exposed to shocks because those earnings are not being transformed into durable buffers. Until that transformation occurs, currency stability will remain contingent, confidence fragile and policy space constrained.
In the final analysis, sustainable monetary stability is not built on how much foreign exchange an economy earns in a good year, but on how much it retains when conditions are favourable. On that measure, Zimbabwe’s challenge is not one of capacity, but of conversion.
