On NOVEMBER 27, 2025, minister of Finance, Economic Development, and Investment Promotion, Mthuli Ncube, unveiled the proposed 2026 National Budget, which clearly outlines expected revenue collection and the spending ceiling for the upcoming fiscal year.
Within this budget, three critical issues require immediate attention: The mono-currency plan, public debt and taxation. These issues are not just peripheral concerns but are central to the nation’s economic stability and growth.
Addressing them effectively could shape the nation’s economic future, making this week’s focus not only timely but crucial for the column’s readers.
Mono-currency plan
The national budget outlines several crucial measures that could revolutionise Zimbabwe’s economic future, significantly shaping market expectations and the broader macroeconomic landscape.
Notably, it boldly aims to establish a mono-currency system, targeting the Zimbabwe Gold (ZiG) as the sole legal tender for all debts — public and private — by 2030.
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While past attempts in the post-dollarisation period (2009-2018) failed, the 2026 National Budget rightly emphasises that this transition will be gradual, market-driven, and contingent upon critical conditions being met.
These critical conditions include sustained macroeconomic stability, ample foreign reserves, efficient currency management, a stable exchange rate, and growing demand for the local currency.
Achieving these will be essential for a successful transition, and current trends — rising reserve assets, stable ZiG exchange rates since September 2024, and single digit inflation since February 2025 — offer a compelling foundation.
If these positive trends continue for at least a decade, supported by full-exchange rate liberalisation, widespread adoption of ZiG, and swift implementation of reforms across the economic, governance and land sectors, Zimbabwe can attain the macro-stability necessary for a thriving mono-currency system.
However, although the Treasury’s latest position is that the government will introduce a mono-currency regime only after the fulfillment of critical conditions, Statutory Instrument 218 of 2023 (SI218) stipulates a deadline of the end of 2030.
Unless SI218 is repealed, the market will continue to use this end date, risking causing market panic and confusion.
It is crucial to recognise that 2030 is an overly optimistic target for establishing such a stable environment. Zimbabwe faces persistent challenges, including corruption, governance issues, and inefficient public spending, which threaten the achievement of necessary reforms.
The government’s continued expenditure arrears, inadequate reform implementation, and border-market barriers hinder progress and delay the much-needed price discovery in the foreign exchange market.
Additionally, reliance on primary commodities and climatic vulnerabilities limits fiscal space, constraining efforts to build climate resilience and promote broad-based growth.
I understand the desire to move swiftly toward a single currency, but I warn that rushing this process risks severe economic instability. Past rushed de-dollarisation efforts have led to hyperinflation, poverty and wealth loss.
While removing foreign currency dependence is strategic — improving monetary policy independence and the government’s fiscal capacity — such a profound change must be approached carefully.
I strongly recommend extending the transition timeline to at least 2040, allowing Zimbabwe ample time needed to implement reforms successfully, stabilise the macroeconomy, and avoid the pitfalls of haste.
A measured, phased approach will safeguard Zimbabwe’s future, ensuring that the move to a mono-currency system is both sustainable and beneficial for all economic agents — government, business, and consumers/workers.
Public debt
The Public Debt Report accompanying the 2026 National Budget Statement revealed that, as of September 2025, total Public and Publicly Guaranteed (PPG) debt was US$23,4 billion (44,7% of GDP), up from US$21,5 billion as of December 2024.
The PPG debt includes external PPG debt of US$13,6 billion and domestic PPG debt of US$9,8 billion.
Of the external PPG debt, arrears are estimated at US$7,7 billion, with 63,2% owed to bilateral creditors and 36,8% to multilateral creditors. Further analysis of official debt data shows that between December 2024 and September 2025, an 8,5% increase in PPG debt was mainly due to the rise in domestic expenditure arrears to service providers, which grew from US$34 million in December 2024 to US$1,3 billion in September 2025.
These figures indicate that Zimbabwe is in debt distress, facing challenges in settling obligations when they are due and needing debt restructuring, as evidenced by rising arrears and penalties.
For example, almost all of the outstanding debt from the Paris Club creditors is in arrears (98%).
Furthermore, the 2026 National Budget revealed that debt unsustainability is leading to increased diversion of resources from service delivery to debt repayment.
As of September 2025, the Treasury spent ZiG11,2 billion servicing domestic debt, with an additional ZiG4,8 billion expected to be paid before the end of that year. This amount significantly exceeds the Treasury's initial 2025 social protection allocation.
Moreover, high levels of debt and past defaults have resulted in Zimbabwe being cut off from accessing concessional credit lines from international financial institutions.
As a result, to boost revenue, the country is now overly reliant on tax hikes (which discourage work and saving), increased domestic borrowing (which displaces private sector investment), and the adoption of resource-backed loans (which promote unsustainable resource extraction and cause severe developmental issues).
Additionally, this debt crisis is now hampering the countercyclical effects of fiscal policies and sustaining high market interest and tax rates.
The government has since developed its debt resolution strategy and created a Structured Dialogue Platform to engage with all stakeholders, including creditors and development partners, for debt resolution.
Other initiatives include improving transparency of debt data by periodically tabling public debt reports before parliament, implementing five-year cycles of Medium-Term Debt Management Strategies, and crafting an Expenditure Arrears Clearance Strategy (2026-2030).
Despite these efforts, we expect public PPG debt to keep rising in 2026 due to ongoing fiscal spending pressures and mounting payment arrears.
Additionally, inconsistencies in the official debt figures reported by the government and the International Monetary Fund (IMF) undermine the credibility of official debt data.
For instance, the IMF reports a total public debt of US$23,3 billion by the end of 2024, compared to the PDMO figure of US$21,5 billion, resulting in a nearly 10% discrepancy (US$1,8 billion).
We will provide a granular analysis of the 2025 debt report and its implications for economic agents in due course.
Taxation
The 2026 National Budget reveals the government’s tight fiscal realities as it continues its tax-and-spend spree. Since the 2019 austerity measures, taxpayers have faced a new set of taxes each year.
The latest 2026 national budget revenue proposal consists high taxes such as increasing the Cash Withdrawal Levy to 2%, maintaining 2% IMTT on US dollar transactions, increasing tax on punters’ winning from 10% to 25%, and introducing a Digital Services Withholding tax of 15%. Below is a brief explanation of some of the reasons taxpayers continue to face excessive taxes:
The economy continues to grow, driven by expanding informal activity, now estimated at 76% — formal businesses are electing to go informal to reduce the tax compliance burden.
But the informal economy is a hard-to-tax sector, as many companies and workers are not registered with Zimra for tax purposes. This high rate of informalisation is shrinking the tax base, forcing the Treasury to increase taxes on the already tax-compliant formal businesses and workers.
Again, due to previous debt default, interest and principal arrears, and penalties accrued since the 2000s, Zimbabwe can no longer access concessional credit lines from international financial institutions, such as the World Bank.
The closure of this concessional window has posed challenges for Zimbabwe in funding long-term projects of high socio-economic impact, forcing it to rely on a tax-funded budget.
Furthermore, the use of foreign currency cripples monetary policy, leading to a loss of seigniorage revenue. This is the profit a government makes from creating money, calculated as the difference between the face value of currency (banknotes and coins) and the much lower cost of producing it.
It also comes from the interest a central bank earns on newly created money. This revenue is critical for funding government activities, though excessive use risks inflation.
Additionally, rising resource leakages from public corruption, weak oversight and accountability institutions such as Parliament and the Office of the Auditor-General, porous public procurement systems, and illicit financial flows are eroding fiscal space while denying taxpayers a run for their money.
With all this in mind, Treasury has no option but to introduce new taxes to raise the revenue envelope to quench the ever-growing fiscal spending now fueling domestic debt.
Consequently, the tax regime has become too regressive, thereby sustaining poverty, widening inequality, and discouraging saving, work, and private investment.
I, therefore, see the 2026 National Budget Statement’s new layer of high taxes — added to already existing high taxes — as problematic.
They are likely to produce the Laffer Curve effect, where higher tax rates end up shrinking government revenue by discouraging work and investment, and by driving people into the underground economy or into tax avoidance and evasion.
Sibanda is an economist employed at Maxiquantus Capital Investments and Advisory. His perspectives are independent and do not necessarily reflect the views of his employer.—bravosibanda@gmail.com.