By Business Reporter-Finance Minister Mthuli Ncube on Thursday presented the 2026 National Budget, which reads like an elaborate attempt to project stability while avoiding the core structural collapse that has haunted the economy since 2003.
Beneath the polished rhetoric of “macroeconomic stability”, “fiscal consolidation”, and “Vision 2030”, the Budget exposes a government still unwilling to confront the fundamental truth: Zimbabwe cannot rebuild its economy without first restoring confidence in the currency, re-establishing credible institutions, and abandoning the failed fantasy of a “stable local currency” in a dualised economy. For 22 years, successive governments have recycled the same promises—stability is coming, inflation is under control, reforms are underway. Yet real incomes continue collapsing, industry remains marginal, the informal sector dominates economic activity, and public confidence in the financial system is virtually non-existent. The 2026 Budget continues this tradition of denial, showcasing numbers that look impressive on paper but collapse under scrutiny.
Minister Ncube celebrates alleged economic recovery: a projected 6.6% growth in 2025, declining inflation, a current account surplus, and “strong” diaspora inflows. But these headline indicators conceal deeper structural failures that have persisted since 2003. The introduction of the ZiG in April 2024 is hailed by the Minister as a “milestone” that restored stability, yet its performance only mimics temporary administrative control rather than market confidence. Inflation figures given in the Budget—ZiG annual inflation at 32.7% in October 2025—reflect a currency that is failing to store value, even under tight monetary suppression. The claim that inflation will fall to single digits in 2026 is purely aspirational. It ignores the underlying drivers of recurring hyperinflation cycles: lack of fiscal transparency, quasi-fiscal activities in the shadows of the state, uncontrolled money creation, weak central bank independence, persistent exchange rate distortions and public mistrust following repeated currency demolitions. Without addressing these, the ZiG is not a reform—it is merely another temporary currency experiment.
The Budget’s growth claims also misread the economy. The government celebrates 8.1% first-half growth and a 6.6% projection for 2025, mainly driven by agriculture, but Zimbabwe has repeatedly mistaken rainfall-driven agricultural upticks for structural growth. Manufacturing capacity utilisation remains low, industry relies heavily on imports, power shortages persist despite token allocations to the energy sector, mining growth is tied to global commodity cycles rather than domestic reform, and job creation remains stagnant with youth underemployment still cripplingly high. The Budget’s numbers paint a recovery that the real economy does not feel.
At the heart of the crisis is a simple, politically uncomfortable fact: Zimbabwe’s economy functions de facto as a dollar economy. Eighty percent of meaningful transactions are priced, saved, or settled in dollars. Salaries, taxes and key government expenditures increasingly require hard currency. Businesses refuse to price long-term contracts in ZiG because the currency cannot reliably store value. Yet the Minister persists in positioning the ZiG as the anchor of macroeconomic stability. This refusal to accept full dollarisation as the foundation for credible reform is the single most damaging policy stance the government continues to take. Dollarisation is not a political choice but an economic reality forced by market behaviour; denying it ensures policy dissonance and recurring crises.
Public debt, listed at US$23.4 billion or 44.7% of GDP, is a major red flag. That number likely understates the true fiscal obligations when quasi-fiscal central bank liabilities, state enterprise guarantees and other off-budget commitments are considered. The Budget offers no convincing roadmap for comprehensive debt transparency, restructuring or sustainable arrears clearance. Government projects a near-balanced budget but Zimbabwe has balanced budgets before only to later reveal arrears, off-budget borrowing and quasi-fiscal spending. A balanced budget is meaningless without credible transparency, independent audits and binding commitments to stop the fiscal slippage that has repeatedly stolen gains from ordinary citizens.
Social services get headline numbers that crumble under inspection. Health receives ZiG30.4 billion, but hospitals lack drugs, equipment and staff retention measures. Education is allocated ZiG47.4 billion, yet teacher vacancies, dilapidated infrastructure and the cost of supplies continue to squeeze quality. The energy allocation of ZiG330.3 million is negligible compared to the scale of the sector’s shortfall and will not resolve the chronic power constraints throttling the industry. Meanwhile, security spending receives ZiG46.8 billion—almost equal to the health allocation—highlighting the persistent distortion in public spending that favours coercive apparatus over human development.
The Budget’s revenue measures—tax tweaks, IMTT reductions, VAT adjustments, incentives for BPOs and liberalisation of gold trading—are important but insufficient. They treat symptoms without curing the disease. Enhanced VAT, revised royalties and digitisation of tax collection can only do so much in an environment where investors and citizens lack confidence in the rule of law, property rights, and policy predictability. The government’s ease-of-doing-business reforms may help administrative costs, but they cannot substitute for credible, long-term macroeconomic anchors.
History offers a clear lesson: the last period of relative stability occurred under widespread use of foreign currency. Between 2009 and 2013, when the Zimbabwe dollar was effectively abandoned and the economy transacted in foreign currency, inflation collapsed, industry reopened, savings returned, and investor confidence improved. Subsequent attempts to reintroduce a local currency without the necessary institutional reforms destroyed those gains. The 2026 Budget alludes to macroeconomic stability but does not confront the political and institutional costs of sustaining a currency that markets reject. The only realistic, immediate policy that would restore price stability, unlock saving, and make fiscal planning credible is a legal, durable, and transparent multi-currency regime anchored in the US dollar (or a basket of hard currencies) that is protected from politicised interventions for a long, specified period.
Implementing full dollarisation would require hard choices: restore central bank independence, stop quasi-fiscal operations, create transparent debt restructuring plans, legislate protections for foreign-currency accounts, and restore confidence in property rights and contracts. It would also require complementary measures to promote export competitiveness, stimulate job-creating investment in manufacturing and agribusiness, and rebuild a functioning banking sector capable of intermediary services rather than serving as a fiscal backstop to the state.
The 2026 Budget is a polished document grounded in optimism but divorced from Zimbabwe’s economic reality. It recycles the same promises made since 2003 while ignoring the structural cracks beneath the surface. Without full dollarisation and deep institutional reforms, the “stability” Ncube celebrates is temporary—and Zimbabwe will once again slide back into crisis. This Budget is not a roadmap to Vision 2030; it is a sophisticated exercise in economic denial.