HARARE — The World Bank has cautioned Zimbabwe against rushing to make the gold-backed ZiG the country’s sole currency, warning that a premature shift could trigger capital flight, fuel instability and drive more activity into the parallel market.

Zimbabwe plans to phase out the use of foreign currencies for domestic transactions by 2030, paving the way for a mono-currency system centred on the ZiG.

But the World Bank says the timing and sequencing of the transition will be critical. It warned that forcing dedollarisation before confidence in the local currency is firmly established could reverse some of the economic stabilisation gains made in recent years.

According to the lender’s latest report, a rushed switch could trigger capital flight, widen parallel-market premiums and undermine economic stability.

The warning comes as Zimbabwe seeks to rebuild confidence in the ZiG after years of currency instability. The ZiG replaced the previous Zimbabwean dollar in April 2024 following repeated currency crashes and inflationary pressures.

The World Bank said Zimbabwe should focus on strengthening the credibility of the local currency before forcing consumers and businesses to abandon foreign currencies.