Mid-Term Monetary Policy Statement at a Glance (August 2026)

1. This Mid-term Monetary Policy Statement is issued in terms of Section 46 of the Reserve Bank of Zimbabwe Act [Chapter 22:15]. The Statement comes at a time when the country has sustained single-digit inflation since January 2026 and has achieved currency and exchange rate stability for almost 2 years, since October

2024. The prudent monetary policy stance pursued by the Reserve Bank has anchored inflation expectations, which assisted the country to weather the impact of the oil price shock, triggered by the conflict in the Middle East.

2. Globally, rising energy prices, tighter financial conditions, and heightened uncertainty are negatively impacting consumption, investment, trade and inflation developments. Consequently, global growth has become more fragile, tilting the balance of risks to the downside.

3. The domestic economy has, however, remained resilient and is projected to grow by 5% in 2026, from 8.3% in 2025, despite the heightened geopolitical tensions which disrupted global supply chains and raised energy prices. The country has continued to experience greater price, currency and exchange rate stability, which supported increased activity across all sectors of the economy.

4. The robust growth momentum for the country has supported a 47.8% increase in foreign currency inflows during the first half of the year, which amounted to US$10.72 billion as of 30 June 2026, compared to US$7.25 billion recorded over the same period in 2025. The higher foreign currency inflows exceeded the cumulative foreign currency payments of US$7.30 billion, recorded between January and June 2026.

5. Reflecting the increased foreign exchange inflows, reserves increased to US$1.7 billion by the end of July 2026, equivalent to approximately 1.7 months of import cover. The foreign currency reserves supported the Reserve Bank’s strategic intervention in the interbank foreign exchange market, ensuring that all bona-fide foreign payments are met. The intervention supported stable exchange rate 3 <!-- page break --> dynamics, with the ZiG/US$ exchange rate oscillating between ZiG25 and ZiG27 per US dollar and the parallel market premium contained at levels of 15%, on average, during the first half of 2026

6. The continued implementation of prudent monetary policy and a supportive fiscal policy resulted in a structural shift in ZiG inflation dynamics from double-digits to low single-digit levels of less than 5% from January to July 2026. In response to the structural shift in inflation dynamics, the Reserve Bank reduced the Bank Policy Rate from 35% to 30% per annum. In addition, the interest rate on the Targeted Finance Facility (TFF) was reduced from 20% to 15% per annum, in line with the downward revision of the Bank Policy Rate.

7. The Reserve Bank enhanced its monetary policy operations through the operationalisation of the ZiG-Denominated Term Deposit Facility (ZiGDTDF), whose uptake has been strong. The facility is designed to absorb excess liquidity from the market and provide an alternative interest-bearing investment instrument.

8. Demand for the local currency increased during the review period, benefiting from the prevailing price and exchange rate stability, as well as the nationwide BiG5ZiG awareness campaign conducted by the Bank from 1-31 March 2026. Reflecting the overall increased use of ZiG in the economy, National Payment System statistics show that the proportion of electronic transactions remained robust at above 40% since May 2026.

9. The banking sector remained safe, sound, well-capitalised, and inclusive, with non- performing loans remaining low within the internationally accepted threshold of 5 percent. The stable macroeconomic conditions also enabled the financial sector to effectively support economic activity. In addition, the National Payment System remained safe, stable and efficient with an uptime of 99%.

10. To support greater macroeconomic stability, engender confidence and support re- engagement, Government has made significant progress under the Staff Monitored 4 <!-- page break --> Programme (SMP). Following the first review of Q1 performance in June 2026, the Reserve Bank successfully met all the Quantitative Targets (QTs) and made significant progress on meeting the SMP structural benchmarks (SBs). The agreed SMP QTs and SBs are aligned with the Reserve Bank's back-to-basics strategy 2026-2030, whose emphasis is on modernizing the monetary policy framework and improving the Bank’s operational effectiveness and efficiency.

11. The IMF will conduct its second SMP Review Mission in September 2026 and self- assessment indicates that the Reserve Bank’s programme performance remains strong and on course.

12. Regarding the SB on Foreign Exchange Market reforms, the Reserve Bank has developed an electronic trading platform which is expected to be rolled out in the fourth quarter of 2026. The electronic foreign exchange trading platform is designed to improve trading in the foreign exchange market by enhancing efficiency, transparency, price discovery and functionality.

13. During the first half of 2026, significant progress has also been made in meeting the Conditions Precedent (CPs) for the transition to mono-currency. It should be noted that the CPs are at various stages of achievement and that the transition to mono-currency will continue to be market driven, ensuring that all the pre- requisites are sustainably met. Going forward, the Reserve Bank will continue to communicate progress made on each of the eight CPs.

14. Looking ahead, the Reserve Bank and Government remain committed to sustain the prevailing price and exchange rate stability to anchor monetary stability and support economic transformation under National Development Strategy 2 (NDS 2).

15. In this regard, the policies contained in this Mid-term Monetary Policy Review Statement are aimed at sustaining single-digit inflation and promoting the wider use of local currency, in line with the transition to mono-currency. 5 <!-- page break -->

16. The measures are a product of the Reserve Bank’s policy calibration which also benefited from extensive stakeholder consultations conducted from 20-31 July

2026. Earlier in March 2026, the Reserve Bank conducted the ZiG Education and Awareness Campaigns to gather valuable feedback from the public to inform policy. Consistent with the Reserve Bank’s commitment to use “communication” as a monetary policy tool, the Bank continues to deepen its stakeholder consultative engagements. In this regard, the RBZConsults, which is attached to this Statement, outlines indications from Stakeholder engagements and provides feedback from the Reserve Bank. 6 <!-- page break --> Table 1: Key Monetary Policy Indicators Apr-24 Dec-24 Mar-25 June-25 Sep-25 Dec-25 Mar-26 June-26 ZiG Month-on-Month Inflation (%) -- 3.67 -0.06 0.28 -0.25 0.20 0.52 0.6 ZiG Annual Inflation (%) -- -- -- 92.5 82.7 15 4.4 4.7 Total ZiG Deposits (million) 4,098 11,958 14,593 16,387 16,763 18,310 21,541 26,872 Non-performing Loans (%) --- 3.37 3.34 2.90 3.07 3.47 3.64 3.19 Reserve Money (ZiG million) 1,239 3,516 3,785 4,658 4,732 5,307 5,732 6,607 Reserve Money Cover (ZiG million) 2,203 12,164 16,871 19,697 23,175 31,408 34,821 38,482 Market Position + NNCDs (ZiG million) 1,597 1,445 2,401 1,877 1,721 3,824 4,751 6,397 Cash and Nostro (USD million) 151 192 296 309 359 574 690 944 Gold Holdings (Kgs) 1,500 2,626 2,779 3,439 3,577 4,030 4,382 4,525 Gold Holdings Value (USD Million) 113 220 275 361 440 566 638 586 Total Reserve Covering ZiG (USD Million) 276 472 630 731 870 1,209 1,434 1,603 Uncovered Demand for Foreign Currency -- 12.27 14.84 17.52 10.22 29.74 36.17 16.08 WBWS Exchange Rate 13.43 25.7985 26.7654 26.9457 26.6439 25.9807 25.3209 26.7698 Implied Exchange Rate -- 24.7374 22.5598 22.6416 19.2724 15.1464 15.2599 18.6933 7 <!-- page break --> MACROECONOMIC AND FINANCIAL DEVELOPMENTS Global Economic Developments

17. The global economy has demonstrated resilience to overlapping shocks from trade policy shifts and the Middle East conflict. The countervailing effects of growing investments in Artificial Intelligence (AI), easing trade tensions, and supportive policies in major economies, have moderated the global economic fallout from the war. Against this background, global growth is projected to decelerate from 3.5% in 2025 to 3.0% in 2026, with a rebound to 3.4% in 2027.

18. Global inflation is projected to rise from 4.1% in 2025 to 4.7% in 2026, representing an interruption to the disinflation process realized in 2025. The projected rise in global inflation mainly reflects increases in energy, fertilizer and food prices. Moreover, the increase in shipping and insurance costs is also expected to generate inflation pressures in import dependent economies. Inflation trends are, however, expected to remain uneven across countries. The inflation outlook for Sub-Saharan Africa (SSA) remains broadly favourable, with inflation projected to moderate from 13.1% in 2025 to 8.8% in 2026.

19. Global commodity markets have shifted into a phase of heightened volatility, following the outbreak of conflict in the Middle East, which has triggered significant disruptions to energy, fertilizer, and industrial supply chains. The shock constrained flows through key Gulf export routes culminating in sharp upward revisions in the 2026 outlook. As a result, the July 2026 World Bank Commodity Markets Outlook Report, forecasts global commodity prices to rise by about 16% in 2026, marking the first annual increase since 2022. In the outlook period, energy prices expected to increase by around 24%. 8 <!-- page break --> Domestic Real and External Sector Developments Real Sector Developments

20. A review of real sector developments during the first half of the year shows that the country is on course to achieve the 5% growth projection for 2026, underpinned by the continued favourable performance in the agriculture, mining, manufacturing and services sectors.

21. The estimated GDP figures for Q1 2026 show strong performance with year-on- year growth at 6.8%, compared to 4.4% realised in the first quarter of 2025. The growth benefited from improved availability of foreign exchange in the Willing- Buyer Willing-Seller interbank market, as well as reliable power supply that has supported increased productivity across all sectors of the economy. Balance of Payments Developments

22. Foreign currency receipts increased from US$7.25 billion in the first six months of 2025 to US$10.72 billion over the same period in 2026. The close to 50% increase in foreign currency receipts was mainly driven by higher export receipts and diaspora remittances.

23. During the first six months of 2026, foreign payments through Authorized Dealers amounted to US$7.3 billion, up by 44.9% from US$5.0 billion recorded in the same period in 2025.

24. The current account position strengthened to an estimated US$1.3 billion during the first half of 2026, from US$248 million recorded during the corresponding period in 2025. The country’s external position benefited from strong remittance inflows and favourable terms of trade, driven by higher international prices for key mineral exports, particularly gold and platinum group metals (PGMs). 9 <!-- page break --> MONETARY POLICY PERFORMANCE ASSESSMENT

25. The Reserve Bank’s prudent money supply and liquidity management has delivered price and exchange rate stability in the economy, reflecting the effectiveness of the monetary policy framework. The effectiveness of the framework was evidenced by the attainment of single-digit inflation, a stable exchange rate, progressive accumulation of foreign currency reserves and an efficient foreign exchange market. Inflation Developments

26. Reflecting the Reserve Bank’s prudent monetary policy, ZiG annual inflation was sustained below 5% during the first half of 2026. The prevailing low and stable inflation environment has supported greater predictability and certainty critical for business planning, investment and inclusive growth.

27. Annual ZiG inflation increased from 4.1% in January 2026 to 4.8% in April 2026, mainly driven by the increase in fuel prices, before reverting to its pre-shock path in May 2026. The moderate increase in annual inflation in April 2026 reflected well-anchored inflation expectations.

28. Annual inflation stood at 3.2% in July 2026, on account of the decline in fuel prices in June 2026 and stability of the ZiG/US$ exchange rate. The significant decline in annual inflation from 4.7% in June 2026 to 3.2% in July was also explained by the favourable base effect, reflected in the slowdown in monthly inflation in July 2026 to 0.1%, compared to 1.6% recorded in the same month in 2025. Exchange Rate Developments

29. The Willing-Buyer Willing-Seller (WBWS) interbank market exchange rate remained stable, averaging around ZiG25.93 per US$ from January to July 2026. In addition, the parallel market exchange rate premium continued to narrow to levels of about 15% during the first seven months of 2026. 10 <!-- page break -->

30. The exchange rate stability continued to be supported by improved foreign exchange inflows, accumulation of foreign currency reserves backing ZiG and strategic intervention in the foreign exchange market to ensure that all bona-fide foreign obligations are settled. Foreign Currency Reserve Cover

31. Foreign currency reserves stood at US$1.7 billion as at end July 2026, equivalent to 1.7 months of import cover. The growth in foreign currency reserves was supported by royalties in-kind from precious minerals and the channelling of the 5% portion, from the 30% export surrender requirements towards reserves build- up.

32. At 1.7 months import cover, the foreign currency reserves adequately covered the entire ZiG deposit base by almost 1.5 times as at end of July 2026 and the stock of reserve money by 6 times. Monetary Developments

33. Money supply developments in the six months to June 2026 remained consistent with targeted inflation, economic growth and the need to increase the wider usage of the domestic currency.

34. During the first half of 2026, reserve money growth was kept within targets, amid a steady expansion in broad money supply supported by effective liquidity management. Total reserve money stood at ZiG34.69 billion as at June 2026, of which about 20% was in local currency. Annual growth in aggregate reserve money (ZiG and foreign currency) decelerated to 39.35% in June 2026, compared to 243.94% in June 2025. Over the same period, annual growth in the ZiG component of reserve money slowed down significantly, from 279.74% to 41.93%. 11 <!-- page break -->

35. As a result, reserve money levels for Q1/2026 and Q2/2026 stood at ZiG5.73 billion and ZiG6.60 billion, respectively, within SMP Targets agreed between the Reserve Bank and the IMF of ZiG5.95 billion and ZiG7.33 billion, respectively.

36. Total broad money supply (M3) increased by 31.4% from ZiG108.09 billion in December 2025 to ZiG142.01 billion in June 2026, on the back of increases in both local and foreign currency deposits. On a year-on-year basis, total broad money grew by 45.9% in June 2026, compared to 127.8% during the same period in 2025.

37. The local currency component of M3 increased from ZiG20.17 billion in December 2025 to ZiG27.95 billion in June 2026, consistent with the increased use of local currency in the economy. On an annual basis, the local currency component increased by 62.5% in June 2026, compared to 87.2% in June 2025. Liquidity Management

38. Liquidity dynamics in the economy were largely driven by Government and foreign exchange operations. The major injections of liquidity into the market between 2 January 2026 and 4 August 2026 were Government expenditure (ZiG42.3 billion) and Reserve Bank purchase of export surrender proceeds (ZiG32.8 billion).

39. During the same period, the major liquidity withdrawals were through Government revenue collections (ZiG46.1 billion) and Reserve Bank foreign currency sales (ZiG26.9 billion). Other items (Including Statutory Reserve transfers and Treasury Bills issuances and maturities) had a net injection of ZiG1.9 billion. These gross movements in market liquidity culminated in overall net injection of ZiG4.0 billion.

40. For effective liquidity management and to complement NNCDs which amounted to ZiG7.7 billion as of 4 August 2026, the Reserve Bank operationalised the ZiGDTDF during the first half of 2026, to enhance monetary policy operations. In 12 <!-- page break --> addition to being an indirect monetary policy instrument 1, the ZiGDTDF is designed to ensure a positive real return on local currency savings. In this regard, the instrument is expected to serve as a benchmark for interest rates in the economy.

41. Two issuances were undertaken in June 2026, attracting ZiG466.6 million against an offer of ZiG500 million, demonstrating a strong market uptake. As at 17 July the outstanding ZiGDTDF balance stood at ZiG356.6 million. As such, ZiG liquidity was maintained within the Optimal Liquidity Level (OLL) at ZiG600.5 million. Statutory Reserves Requirements

42. The statutory reserve requirement ratios remained at 30% for demand/call deposits and 15% on savings and time deposits, for both local and foreign currency.

43. Consistent with the increase in local currency deposits, local currency statutory reserve balances increased by 44.4%, from ZiG4.69 billion on 2 January 2026 to ZiG6.77 billion as of 4 August 2026. Similarly, foreign currency statutory reserve balances increased, reflecting an increase in foreign currency deposits due to improved export performance Interest Rate Policy

44. The Reserve Bank pursued a prudent monetary policy stance, appropriately calibrated to balance growth and inflation objectives. The Reserve Bank reviewed the Bank Policy Rate downward from 35% to 30% per annum in June 2026, reflecting the structural shift to low inflation dynamics.

45. The Reserve Bank expects banking institutions to align their lending rates with the movement in the Bank Policy Rate and cost of funds. 1 The instrument is available to Banks, Building Societies, Deposit-Taking Microfinance instiutions (DTMFIs), POSB, Insurance and Pension Funds, Corporates and Individuals – to everyone with surplus investable funds on a voluntary basis, with maturities of 30, 60 and 90 days. 13 <!-- page break --> Targeted Finance Facility (TFF)

46. In line with the reduction in the Bank Policy Rate, the interest rate on the TFF was reduced from 20% to 15% for banks and capped at a maximum all-in rate of 25% for on lending to the productive sectors of the economy.

47. The reduced interest rate on TFF is expected to support increased lending to the productive sectors of the economy, with the facility limit currently set at ZiG1.2 billion. The uptake on TFF loans has been slow owing to the relatively high real interest rates that prevailed before the adjustment in the policy rate. The BiG5ZiG Banknote Series

48. Leveraging on improved price, currency and exchange rate stability, the Reserve Bank successfully introduced the upgraded BiG5ZiG Banknote Series, with a modern “look and feel”, as well as enhanced durability and quality on 7 April 2026. Reflecting the positive uptake of the upgraded BiG5ZiG Banknote Series, a total of about ZiG600 million was issued into circulation during the first half of 2026.

49. The increased use and uptake of ZiG in the economy was also shown by an increase in the proportion of ZiG-based transactions on the National Payment System. The value of ZiG transactions processed through the RTGS system steadily increased during the first half of 2026 to above 40% in May and June 2026. Staff Monitored Programme

50. The IMF conducted its first SMP Review Mission for Q1/2026 (end-March) in June

2026. Following the first Review Mission, the IMF confirmed that the Reserve Bank had successfully met all Quantitative Targets (QTs) and made significant progress on meeting the Structural Benchmarks (SBs) for Q1/2026. The second IMF SMP Review Mission for Q2/2026 (end-June) is scheduled for September 2026, and the Reserve Bank self-assessment indicates that Programme performance targets are on course to be met. 14 <!-- page break -->

51. The QTs under the Reserve Bank’s purview are shown in Table 2. Table 2: Zimbabwe Quantitative Targets (March and June 2026) Quantitative Target Program End March Program End June 2026 Q1 2026 Actual Q2 (Provisional) Ceiling on changes in credit to the nonfinancial public sector from the 0 0 (Met) 0 0 RBZ (US$ million) Floor on changes in net official 74 139 (Met) 195 215 international reserves (US$ million) Ceiling on changes in ZiG monetary 602 425 (Met) 1598 875 base of the RBZ (ZiG million) Source: Reserve Bank of Zimbabwe Regional Macroeconomic Convergence (MEC)

52. During the first half of 2026, the country's overall macroeconomic performance showed steady progress towards meeting the Southern African Development Community (SADC) MEC benchmarks/targets. Specifically, Zimbabwe is on track to achieve three of the four primary convergence indicators in 2026, namely inflation, the budget balance, and public debt. On secondary indicators, Zimbabwe has converged with the benchmark on current account and central bank credit to Government.

53. The SADC benchmark for economic growth is 7%, but the region is projected to grow by 3.6% on average in 2026. In this regard, the projected growth rate for Zimbabwe at 5% for 2026 exceeds the regional average of 3.6%. Table 3 shows Zimbabwe’s Performance against SADC MEC targets. Table 3: SADC Macroeconomic Convergence Criteria Indicators Target Zimbabwe SADC Average (Proj. 2026) (June 2026) Primary Indicators Inflation (Annual Rate) 3-7% 3.2%* 6.7% Budget Deficit/ GDP (%) < 3% 1.7% (surplus) -4.0% (deficit) Public Debt/ GDP (%) < 60% 50.4% 55% Economic Growth (Real GDP annual Rate) (%) > 7% 5.0% 3.6% Secondary Indicators Current Account Deficit/GDP (%) < 3% 4.1% (surplus) -3.4% (deficit) Central Bank Credit to Government 5% 0.0% 3.2% External Reserves (Months of Import Cover) 6 Months 1.7 months* 4.5 months * For Zimbabwe Inflation outturn and FX Reserves position are as at July 2026. <!-- page break --> FINANCIAL SECTOR Banking Sector

54. The banking sector remains safe, sound, resilient and inclusive benefiting from the prevailing stable macroeconomic conditions. Banking institutions are well- capitalized, liquid and profitable, with credit risk remaining low.

55. As at 30 June 2026, the condition and performance of the banking sector was underpinned by satisfactory outcomes across the key financial soundness indicators as presented in Table 4. Table 4: Financial Soundness Indicators (Jun 2025 – Jun 2026) Source: Reserve Bank of Zimbabwe, 2026 16 <!-- page break -->

56. The financial soundness indicators reflect the sector’s resilience, prudent risk management, and continued capacity to support economic activity. Sustainability Mainstreaming

57. There has been notable progress in the adoption of sustainable banking practices in the financial sector. The Reserve Bank continues to provide supervisory guidance to the institutions participating in the Sustainability Standards and Certification Initiative (SSCI).

58. As at 30 June 2026, a total of 19 institutions comprising the Reserve Bank, 13 2 banking institutions, two (2) development financial institutions, two (2) DTMFIs and one (1) bank holding company were participating under SSCI. To date, two (2) banking institutions have been SSCI certified and are implementing various activities in line with the SSCI standards.

59. On its part, the Reserve Bank has successfully completed the SSCI requirements and is due to receive certification from the European Organisation for Sustainable Development (EOSD) at the end of August 2026. This will be a key anchor to drive sustainability in the financial sector in Zimbabwe. National Payment Systems

60. National Payment Systems remained resilient and recorded 99% up-time for the RTGS and retail payment platforms, during the first half of 2026. 2 ZB Building Society and FBC Building Society which were participating surrendered their licenses as at 31 December 2025. 17 <!-- page break --> MONETARY POLICY MEASURES AND OTHER REGULATORY MATTERS Monetary Policy Framework

61. The Reserve Bank’s monetary policy framework remains anchored on the need to achieve and maintain low and stable inflation, which is the primary objective of monetary policy. The current monetary policy framework involves targeting reserve money as the operational target and the exchange rate as the intermediate target. This hybrid framework has served the country well and effectively delivered price, currency and exchange rate stability.

62. In this context, the Reserve Bank is committed to continue implementing a prudent monetary policy, appropriately calibrated to ensure sustenance of low single-digit inflation. The monetary policy framework also takes into consideration the exogenous shocks arising from geopolitical conflicts and climate-induced disasters, including the expected El Niño weather effects in the 2026/2027 agricultural season.

63. Going forward, the Reserve Bank will continue to advance its monetary policy modernisation programme and put in place the pre-conditions necessary for the transition to inflation targeting. Consistent with SADC macroeconomic convergence target for inflation, the Reserve Bank’s monetary policy modernisation framework is aimed at anchoring inflation expectations within the 3-7% range, in the medium-term.

64. A stable macroeconomic environment is critical for the transition to mono- currency, which will be a natural market-driven process, determined by the sustained attainment of the Conditions Precedent (CPs) outlined in NDS 2.

65. Importantly, the Reserve Bank will continue to calibrate monetary policy to sustain single-digit inflation and monetary stability to foster economic resilience. Progress 18 <!-- page break --> on this front will fortify foundations for the attainment of the CPs for the exclusive use of ZiG in the economy. Conditions Precedent (CPs) for Transition to Mono-currency

66. The country is currently operating in a multicurrency system where foreign currency co-circulates with the domestic currency, ZiG. The Reserve Bank reaffirms its commitment to a smooth transition to mono-currency when the CPs for migration are fully met and durably sustained. In this context, the Reserve Bank will regularly update the public on progress made towards the attainment of CPs. Table 5 details the CPs and the status of implementation. Table 5: Conditions Precedent for Transition to Mono-Currency No. Condition Precedent Measure of Success Status

1. Durable macroeconomic  Inflation sustained  Annual ZiG inflation has stability, characterized within the SADC averaged 4.2% for the first 7 by low and stable benchmark of 3-7%. months of 2026 and is expected inflation at single-digit  Sustained Single-digit to remain low and stable within levels. Inflation for 24 single-digit levels in the months. medium to long term.  Anchored Inflation Expectations

2. Adequate foreign  Achieve a minimum of  Foreign currency reserves stood currency reserves of at 3 months of import at US$1.7 billion as at end July least 3-6 months of cover and maintain 2026, equivalent to 1.7 months imports cover in the reserves of up to 6 of import cover. medium to long-term. months of import cover  The Reserve Bank is targeting in the medium to long to reach between 1.8 and 2 term, consistent with months of import cover by end the SADC of 2026. convergence criteria.  Restored Market Confidence

3. Efficient FX  Timely clearance of  The adoption of a market- management system that bona-fide foreign determined foreign exchange promotes ease of access payment requests in management system to FX by importers. the WBWS. engendered an efficient foreign  All invoices submitted exchange trading system under for payment are met the Willing-Buyer Willing- with no outstanding Seller (WBWS) arrangement. FX demand backlog.  Economic agents with bona-  Completed fide foreign payment requests development of an have ease of access to foreign enhanced FX trading currency through the WBWS. 19 <!-- page break --> No. Condition Precedent Measure of Success Status System. Roll-out in  All foreign payments are Q4/2026 currently being honoured, and  Restored Market the Reserve Bank ensures that Confidence the market clears, at all times.  The Reserve Bank is developing an automated foreign currency trading system, with technical assistance from the World Bank, to be launched in the fourth quarter of 2026.

4. Stable exchange rate  The real effective  The exchange rate has remained dynamics with exchange rate relatively stable, oscillating minimum over/ maintained within +/- between ZiG25-27/US$ - undervaluation of ZiG. 10% moving by only 2.9%, from over/undervaluation. January to June 2026,  Sustained exchange rate stability for at least  The real effective exchange rate 24 months is closer to its equilibrium, with  Restored Market the parallel market premium Confidence narrowing and averaging 15%.

5. Increased demand for  Increasing the ZiG  To complement Government local currency (ZiG) – based transaction from efforts, the Reserve Bank has recalibration of the the current 40% to issued attractive ZiG- percentage of achieve 60% in the denominated instruments. Government taxes and medium term.  In addition, effective inflation broadening the payment  Increase in the management, coupled with of public sector goods proportion of taxes ongoing ZiG awareness and and services in local paid in ZiG to above education campaigns on the currency. 60% and target to back of high-quality BiG5ZiG achieve 100% in the Banknote Series, has enhanced medium term. confidence in ZiG.  Restored Market  On the fiscal side, the payment Confidence of taxes in the 50:50 proportion at the QPDs has enhanced the demand for ZiG.  The decision by Government to settle public sector supplier invoices in ZiG will broaden the use and demand for ZiG.  Government has reduced IMTT for ZiG payments to 1.5% from 2% while maintaining 2% for USD transactions to encourage the use of ZiG.

6. Financial sector  Stable banking sector  The banking sector has stability. characterised by: remained safe and sound with  Non-performing loans adequate capitalisation, (NPL) ratio below the satisfactory asset quality and international high liquidity buffers. benchmark of 5%, and  NPL ratio at 3.19% as at June 2026. 20 <!-- page break --> No. Condition Precedent Measure of Success Status Capital adequacy ratio  CAR at 24.13% as at June 2026. (CAR) above 12%.

7. Efficient and secure  Payment system  The National Payments System National Payments uptime maintained remained efficient with an System to promote ease above 95%. average up-time of about 99%, of payment in ZiG catering for both ZiG and US locally. dollar transactions.  The NPS has had no reported incidences of cybersecurity breaches and loss of value to market participants.

8. Fiscal and monetary  No recourse to  There is enhanced monetary policy cohesion with inflationary central and fiscal complementarity, non-monetisation of the bank financing of the with Government having no budget. budget. recourse to inflationary Central Bank financing.

67. The detailed progress made on the CPs is summarised in Figure 1. Figure 1: Progress Tracker on CPs for Transition to Mono-Currency Status Source: Reserve Bank of Zimbabwe, 2026

68. Reflecting the progress made to date on the transition to mono-currency, Figure 2 illustrates the Reserve Bank’s self-assessment-CP-barometer as at July 2026. 21 <!-- page break --> Figure 2: Mono-Currency Conditions Precedent – Market Driven Barometer Source: Reserve Bank of Zimbabwe, 2026

69. The overall weighted score of 50.1% was determined by a weighted average of progress on each of the CPs, with the weights reflecting the overall importance of each CP supporting the transition to mono-currency.

70. Importantly, the barometer seeks to provide an objective and indicative measure of the status of achievement of the CPs and does not signal immediate transition to mono-currency, which remains a market-driven process.

71. In this regard, the public is invited to make their own assessment and evaluation of the current monetary and financial conditions to establish consensus on the Central Bank’s indicative observations. Maintenance of Foreign Currency Denominated Contracts…

72. The Reserve Bank reiterates that the transition to mono-currency will be conditions-based and not date-dependent. At the time of transition, all domestic products and services will be exclusively transacted in local currency. However, 22 <!-- page break --> foreign currency accounts will be maintained, and all USD-denominated contracts will be fulfilled in the same currency.

73. Economic agents who might need to settle their foreign currency denominated obligations are expected to source the foreign currency from the foreign exchange market. On the other hand, economic agents in need of settling domestic currency payments but holding foreign currency will have to convert their foreign exchange to local currency to make domestic payments. Monetary Policy Measures

74. Reflecting the macroeconomic and financial developments during the first half of 2026, the need to stay the course and ensure policy consistency, cannot be overemphasised. This will be important to sustain single-digit inflation to anchor monetary stability and enhance macroeconomic resilience. The monetary policy measures for the next six months are as follows: (a) Interest Rates i. Bank Policy Rate

75. The Monetary Policy Committee (MPC) reduced the Bank Policy Rate from 35% to 30% in its Q2/2026 meeting. This adjustment was aimed at aligning the Bank Policy Rate to the structural shift in inflation, which has remained low and stable in the first 7 months of 2026.

76. Going forward, the MPC will closely monitor inflation developments and the evolution of domestic and external risks to inform the calibration of the Bank Policy Rate. ii. ZiG Denominated Term Deposit Facility (ZiGDTDF)

77. In the February 2026 Monetary Policy Statement, the Reserve Bank introduced the ZiG Denominated Term Deposit facility offered to banks, corporates and individuals as part of the broader strategy of modernising monetary policy. The 23 <!-- page break --> ZiGDTDF, operationalised in May 2026, is designed to provide benchmark interest rates and alternative value preservation instruments in local currency.

78. The ZiGDTDF has enabled the Reserve Bank to develop a short-term yield curve which will serve as a guide to the pricing of money and capital market instruments in the medium to long-term. The interest rates on ZiGDTDF will also be reviewed by the MPC in line with prevailing monetary and financial conditions. iii. Minimum Deposit Interest Rates and Promotion of a Savings Culture

79. Maintenance of positive real deposit interest rates is critical in promoting a savings culture, which provides a pool of investable funds to support domestic investment and inclusive growth. In this regard, the Reserve Bank maintains the minimum deposit rates for savings and time deposits in both ZiG and US$ as follows: Table 6: Minimum Interest Rates for ZiG and US$ Savings & Time Deposits Currency Savings Deposit Rates Time Deposit Rates ZiG Deposits 5% 7.5% US$ Deposits 2.5% 4% Source: Reserve Bank of Zimbabwe, 2026 iv. Review of ZiG Lending Rates to Individuals and Corporates by Banks

80. Following the reduction in the Bank Policy Rate, the Reserve Bank has observed that some banks have not reviewed their lending rates consistent with the structural shift in inflation and monetary dynamics.

81. Currently, the gap between the Bank Policy Rate and average lending rates has become very wide, pricing productive sectors out of formal credit. The Reserve Bank encourages banking institutions to align their lending rates with movements in the Bank Policy Rate and cost of funds. 24 <!-- page break --> v. Review of USD Lending Rates to Individual and Corporates by Banks

82. The Reserve Bank noted market concerns on the level of interest rates applicable on US dollar loans and will continue to engage banking institutions to align USD domestic lending rates with the cost of funds. It is critical to note that the global benchmark rates, including the Secured Overnight Financing Rate (SOFR) and US Treasury Bill rates, moderated by about 2 percentage points between the end of 2024 and mid-2026, and this should ordinarily filter through to the domestic US dollar lending rates. (b) Statutory Reserve Requirements (SRR) Maintained

83. The Reserve Bank introduced differentiated rates on statutory reserve ratios for savings and time deposits, and demand/call deposits for both local and foreign currency. The differentiated rates, which offer lower reserve requirements for savings and fixed deposits, are aimed at incentivising banks to promote savings and time deposits.

84. In its Q2/2026 meeting, the MPC maintained statutory reserve ratios at 15% for savings and time deposits and 30% for demand/call deposits for both local and foreign currency. (c) Non-Negotiable Certificates of Deposit (NNCDs) Maintained

85. NNCDs will continue to play an important role in managing domestic liquidity, while the Reserve Bank is considering other indirect instruments. The NNCDs ensured that liquidity conditions remained within optimal levels daily, supporting the Reserve Bank’s prudent money supply management and greater price and exchange rate stability.

86. In this regard, the Reserve Bank will maintain the NNCDs in its monetary policy toolkit for open market operations to support the effective management of liquidity and money supply in the economy. 25 <!-- page break --> (d) Exporters’ Foreign Currency Retention Threshold Maintained

87. Export surrender proceeds continued to support the smooth functioning of the WBWS interbank market, the clearing of bona-fide foreign invoices, and the build- up of foreign exchange reserves.

88. To engender lasting exchange rate stability in support of the attainment of the conditions precedent on the accumulation of foreign currency reserves, the current retention threshold is maintained at 70%.

89. The retention threshold is well-calibrated and aligned to meet the ZiG and FX requirements of exporters. To ensure that the retention framework is sustainable, generators of foreign currency are encouraged to cascade the same to their suppliers and service providers.

90. The extension of retention requirements to small-scale gold producers is currently under review as efforts are underway to ensure that suitable bank arrangements are in place for this market segment. (e) The Targeted Finance Facility (TFF)

91. The Reserve Bank increased the envelope of funds available to the productive sectors in the economy under the TFF, in the February 2026 Monetary Policy Statement.

92. In line with the reduction of the Bank Policy Rate, in the Q2/2026 MPC meeting, the rate applicable to banks on the TFF was reduced from 20% to 15%, with banks lending at a maximum of 25%. The total TFF envelope remained at ZiG1.2 billion. The Reserve Bank encourages the productive sector to approach their banks to access this facility.

93. The TFF interest rate will continue to be reviewed by the MPC in line with the prevailing monetary and financial conditions. 26 <!-- page break --> (f) Enhancing Foreign Exchange Market Functioning and Flexibility

94. The Reserve Bank has made significant progress on the development of the electronic foreign exchange trading platform to support the smooth functioning and flexibility of the foreign exchange market.

95. The platform will support real-time transactions and reflect market fundamentals, improving allocative efficiency and price discovery, promoting interbank trading among Authorised Dealers. In addition, the system will be instrumental in eliminating market segmentation practices by banks and reducing reliance on the Reserve Bank as the primary facilitator of interbank foreign exchange trades.

96. The system is undergoing validation by the World Bank and is expected to be rolled out in the last quarter of 2026. In the interim, the Reserve Bank has implemented a precursor to the enhanced FX trading system where banks are now trading directly amongst themselves on a daily basis, with the Central Bank only intervening to support smooth market operations.

97. The operational modalities and detailed implementation guidelines of the automated foreign currency trading system will be communicated to the market in due course. (g) Unlicensed Lenders

98. The Reserve Bank has noted the emergence of unlicensed providers of credit, including individuals, and online platforms that are operating outside the financial sector regulatory perimeter.

99. Against this background, the Reserve Bank wishes to advise the public engaging with such participants that they risk being exposed to excessive interest rates, misuse of personal information, loss of assets pledged as collateral, and limited avenues for redress or recourse. 27 <!-- page break -->

100. The public is encouraged to verify with the Reserve Bank the licensing status of credit providers before entering into financial agreements. (h) The Upgraded BiG 5 ZiG Banknotes Distribution and Availability

101. The Reserve Bank injected the upgraded ZiG10, ZiG20 and ZiG50 banknotes and ZiG coin into circulation to support transactional convenience and wider use of the local currency in the economy.

102. To ensure that local currency cash continues to be available to the banking public, the Reserve Bank has collaborated with banks to develop a smart electronic system to track, on a real-time basis, the distribution of cash in banking halls and ATMs, countrywide, including the remote/rural areas.

103. The banking public is also advised that ZiG coin is available in banking halls, and that they should access these to alleviate change challenges, especially in the transport sector. Other Supportive Measures (i) Promotion of ZiG Savings and Investment Products

104. The engagement between the Reserve Bank and banking institutions during the 2026 Mid-Term Monetary Policy Consultative Review Meetings showed that an increasing number of banks are now offering ZiG savings and time deposits. Nevertheless, communication and awareness on the available local currency savings and investment products remains limited.

105. To promote pooling of funds, the Reserve Bank encourages banking institutions to regularly promote the available savings and investment products to their customers. Specifically, banks are reminded to communicate the terms and business conditions of the available savings and investment products at least once a month. 28 <!-- page break --> (j) Promoting transparency, consumer protection and market discipline

106. The Reserve Bank has noted an increase in customer complaints against some microfinance institutions which undermines consumer protection, financial inclusion and confidence in the financial sector.

107. The Reserve Bank reiterates the importance of maintaining fair, transparent, and customer-centric business practices across the banking and microfinance sectors.

108. In this regard, all regulated institutions are required to strengthen their consumer protection frameworks, enhance disclosure standards and ensure the prompt resolution of complaints.

109. All microfinance institutions are required to disclose to their customers and display both monthly and annual rates of interest on loans and advances which they grant.

110. With immediate effect, each microfinance institution shall conduct and document adequate affordability and repayment capacity assessments of its borrowers before granting credit to ensure that the facilities are appropriate and affordable and do not expose the consumer to undue financial hardships due to over-indebtedness. (k) Promoting Digital Payments and Use of POS Machines

111. In the 2025 February Monetary Policy Statement, the Reserve Bank directed banking institutions and Payment Service Providers to ensure that every business account is issued with a POS machine to enhance digital transactions in the economy. In this context, the Reserve Bank encouraged all Local Authorities and other licensing entities to promote the use of formal banking channels by ensuring all applicants for trading licences have a bank account and functional POS.

112. In the intervening period, the active POS population, however, remained steady at about 36% of total deployments reflecting limited uptake. 29 <!-- page break -->

113. In this regard, the Reserve Bank encourages banking institutions, Payment Service Providers, Local Authorities and other licensing entities to continue promoting digital transactions in the economy through the use of POS machines. (l) Strengthening AML/CFT/CPF risk management

114. In May 2026, the Reserve Bank disseminated the results of the Banking Sector Risk Assessment Report, and banking institutions were to incorporate the outcomes of the Report into their institutional risk assessments and AML/CFT/CPF Programmes, ensuring that mitigation measures are risk-based and proportionate.

115. Against this background, all banking institutions are required to submit to the Reserve Bank by 31 December 2026, Board-approved Money Laundering, Terrorist Financing and Proliferation Financing risk management frameworks and policies. (m) Women and Youth Economic Empowerment

116. Cognisant of the catalytic role that women and youth-owned micro, small and medium enterprises (MSMEs) play in driving sustainable economic growth and household welfare, the Reserve Bank will promote gender and youth inclusive finance initiatives. These will be aimed at empowering women and youth-owned MSMEs towards building a more resilient, and financially inclusive economy.

117. Banking and microfinance institutions are required to submit to the Reserve Bank by 31 December 2026 their plans on Targeted Financial Education Programmes for 2027, that support women and youth in understanding financial matters.

118. The National Financial Inclusion Strategy III, which is currently under development, will prioritise financial health and financial capability of women and their MSMEs. 30 <!-- page break --> ECONOMIC, INFLATION AND FINANCIAL SECTOR OUTLOOK

119. The performance of the economy in the first half of 2026 points to continued robust economic growth. As such, the economy is projected to grow by 5% in 2026, benefiting mainly from strong performance of the agriculture and mining sectors. The strong commodity prices, particularly for gold and PGMs, are expected to underpin growth in mining and mineral exports.

120. Reflecting stronger export performance, particularly from minerals and growing remittance flows, the current account surplus is projected to improve from US$2.1 billion in 2025 to US$2.6 billion in 2026. The strong external position is expected to support reserve accumulation and exchange rate stability.

121. Annual ZiG inflation is projected to remain low and stable, averaging about 5% and within the SADC macroeconomic convergence target of 3-7% by the end of the year. Month-on-month inflation is projected to remain below 1%, barring any significant domestic and external shocks.

122. The banking sector is expected to remain stable, resilient and inclusive underpinned by the prevailing macro-economic stability and embedded sustainability practices.

123. Notwithstanding the robust growth performance, the outlook remains dominated by risks from Middle East conflict spillovers, volatile commodity prices and the anticipated super El Nino weather conditions. Against this background, there is need for authorities to put in place mitigatory measures to minimise the economy- wide repercussions of these downside domestic and external risks. 31 <!-- page break --> CONCLUSION

124. Price, currency, and exchange rate stability significantly bolstered confidence, trust, and credibility in the local currency during the first half of 2026. In this regard, the Reserve Bank will “stay the course” and continue with the current prudent monetary policy stance to entrench and sustain stability into the second half of 2026.

125. The Reserve Bank’s monetary policy stance will thus remain appropriately calibrated, flexible and proactive to address any emerging risks from the domestic and global fronts.

126. The successful completion of the IMF SMP is expected to engender and consolidate macroeconomic stability gains made so far. The external endorsement on domestic policies will further bolster confidence and trust in the monetary policy.

127. As such, the Reserve Bank will continue to walk the talk and ensure that price, currency, and exchange rate stability are firmly and durably anchored. I THANK YOU __________________________ DR. JOHN MUSHAYAVANHU GOVERNOR 32 <!-- page break -->