<\/p>\n
The World Bank cautioned Zimbabwe against rushing to end the use of dollars in the economy as it could trigger capital flight.<\/p>\n
The southern African country has set 2030 as the deadline to phase out the domestic use of dollars and make its bullion-backed ZiG its only currency.<\/p>\n
\u201cThe government\u2019s goal of transitioning to a mono-currency ZiG system carries a risk of premature de-dollarisation,\u201d the World Bank said in a report Friday. Experience, including the nation\u2019s own 2019 re-introduction of the Zimbabwean dollar, \u201cshows that forcing a shift before local currency credibility is established triggers capital flight, widens parallel market premiums, and reverses stabilisation gains,\u201d the Washington-based lender said.<\/p>\n
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The Zimbabwean dollar was replaced by the ZiG in April 2024 after multiple crashes fanned inflation, reducing its use.<\/p>\n
\u201cThe pace and sequencing of any transition will be as important as the destination,\u201d the World Bank said.<\/p>\n
It also said the country, which has been locked out of international debt markets since 1999 after a default, has an opportunity to restore access and improve external financing conditions as it engages with multilateral creditors on arrears clearance.<\/p>\n
France and the UK recently agreed to co-chair a body that will help Zimbabwe restructure the billions of dollars it owes creditors.<\/p>\n
\u201cThese changes represent a big shift in the macroeconomic environment and an opening for more ambitious reform.\u201d<\/p>\n
The World Bank expects the economy to expand 5% this year \u2014 the same as the government\u2019s forecast \u2014 and slowdown in 2027 due to El Ni\u00f1o, Victor Steenbergen, senior country economist, said in an interview.<\/p>\n
Forecasters are predicting the current El Ni\u00f1o cycle will be the strongest on record, threatening to bring severe drought to parts of southern Africa.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#World #Bank #warns #Zimbabwe #rush #ZiG #sole #currency<\/p>\n","protected":false},"excerpt":{"rendered":"
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