Zimbabwe is poised to end 2024 with the highest interest rate in Africa, standing at 35%. This comes after the country's monetary policy committee voted to maintain the current borrowing rates during its final meeting of the year. According to Bloomberg, this will make Zimbabwe's interest rate the highest on the African continent.

The decision to keep the interest rate unchanged is aimed at ensuring that inflation expectations remain well anchored, as stated by John Mushayavanhu, the governor of the Reserve Bank of Zimbabwe. The central bank's hardline approach has also boosted the country's bullion-backed currency, ZiG, which has regained some value against the US dollar.

Zimbabwe adopted the gold-backed currency, ZiG, in April to stabilize the economy and protect citizens from currency fluctuations and high inflation. The new currency was introduced after the Zimbabwean dollar, the RTGS, lost three-quarters of its value in the four months leading up to April. Since its introduction, ZiG has shown signs of stabilization, rising 12.7% against the US dollar in November, its greatest monthly gain.

However, the currency has not been without its challenges. A devaluation in September wiped out nearly 43% of its value, triggering double-digit monthly inflation, a decline in government income, and a cut in worker pay. The inflation rate increased to 37.2% in October, averaging over 8% over the previous seven months.

The country's fiscal authorities anticipate monthly inflation to average less than 3% in the year to come, according to Finance Minister Mthuli Ncube. However, Oxford Economics has expressed skepticism about this prediction, citing Zimbabwe's limited foreign exchange reserves, lack of access to external markets, and its tendency to rely on central bank financing to fund fiscal gaps.

In response to the currency devaluation, the government has opted to cut down spending on its budget. Non-wage budget support will be revised, with initiatives such as reducing the cost of running the government, including a 50% reduction in overseas travel and fuel allocations, as well as putting off local workshops.

Zimbabwe's economic struggles are far from over, and the country's decision to maintain its high interest rate is a clear indication of the challenges it faces. As the country heads into the new year, it remains to be seen how its economic policies will impact its citizens and its position in the African economy.