(Ecofin Agency) - The International Monetary Fund (IMF) announced that Zimbabwe's new gold-backed currency has stabilized the nation's economy. This currency, introduced in April, is supported by 2.5 tons of gold and $100 million in foreign currency reserves.

In a June 27 statement released following an Article IV consultation mission, the institution noted that the official exchange rate of the Zimbabwe Gold (ZiG) has remained stable, ending the economic instability seen in early 2024. During that period, the Zimbabwean dollar lost about 260% of its value against the US dollar.

"Assuming that macro-stabilization is sustained, cumulative inflation in the remainder of the year is projected at about 7%. The mission welcomes improvement in monetary policy discipline and recommends further refinements to the policy framework,” the statement reads.  

The IMF praised the enhanced coordination between the Reserve Bank of Zimbabwe and the Ministry of Finance, Economic Development, and Investment Promotion on macroeconomic policies and liquidity management.

The ZiG marks Zimbabwe's sixth attempt to establish a stable local currency in the past fifteen years. The country has faced severe economic challenges since the early 2000s, following land reforms by former President Robert Mugabe. These reforms disrupted a key economic sector and led to Zimbabwe halting debt repayments to international lenders. This crisis caused hyperinflation, prompting the government to print money, worsening the situation. In 2009, Zimbabwe abandoned its national currency in favor of the US dollar. In 2019, the government reintroduced the Zimbabwean dollar, hoping to revive the stagnant economy, but this effort failed.

Zimbabwe owes $13 billion to external creditors and $6.2 billion to local investors, according to Finance Minister Mthuli Ncube. He shared these figures in late May during a meeting on debt arrears clearance.

Without support from international lenders, Zimbabwe has struggled to secure credit lines and attract the foreign investment needed to revive its economy. The IMF has made its financial support conditional on Zimbabwe clearing its debt arrears. The country has started making "symbolic" repayments to multilateral financial institutions and Paris Club member countries.