Harare, 15 February 2024 (TDI): The International Monetary Fund (IMF) has asked Zimbabwe to expedite currency reforms.
On Wednesday, the International Monetary Fund (IMF) urged Zimbabwe this at the end of their staff visit. It emphasized the importance of transitioning towards a market-driven exchange rate and eliminating existing distortions to authorities.
The IMF stated that at present they are unable to offer financial assistance to the country. It is because of Zimbabwe’s unsustainable debt levels and outstanding arrears to official external creditors. Furthermore, for Zimbabwe to enter into an IMF financial arrangement, it must outline a detailed strategy for addressing its external debt.
The detailed strategy should include clearing arrears and implementing reforms aimed at achieving long-term macroeconomic stability.
Unfortunately, Zimbabwe has struggled to obtain financial support from institutions such as the IMF For over twenty years. It is because of its failure to repay debts owed to lenders like the World Bank, the African Development Bank, and the European Investment Bank.
The central bank and finance ministry of Zimbabwe have announced their efforts to implement measures. These measures aimed at stabilizing the Zimbabwean dollar. Most importantly, the Zimambwe dollar has depreciated by approximately 40% against the U.S. dollar since the beginning of the year.
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The IMF and Zimbawe Finance Minister held a joint press conference. In the press conference, Zimbabwe’s Finance Minister Mthuli Ncube stated that officials deliberated on the necessity for the local currency to better align with market conditions. Moreover, the IMF recommended that policymakers should remove a constraint on the 10% permissible trading margin for setting prices in domestic transactions.
Zimbabwe Currency Reforms
IMF representatives convened meetings with various stakeholders for Zimbabwe to expedite currency reforms. These stakeholders were the representatives from private sector, civil society organizations, and Zimbabwe’s development partners.
Also, these representatives include the Minister of Finance and Economic Development, Mthuli Ncube, the Deputy Minister of Finance and Economic Development, David Mnangagwa, and the Governor of the Reserve Bank of Zimbabwe, Dr. John Mangudya, as well.
The mission recognizes the government’s resolve to tackling fiscal challenges. Additionally, it urges the authorities to expedite reforms in the foreign exchange (FX) market by fostering greater transparency and market-driven price determination in the official exchange rate. Also, it urge them the elimination of current exchange restrictions and distortions.
The implementation of structural reforms focused on enhancing the business environment, bolstering economic governance, and mitigating corruption risks are crucial for fostering long-term and inclusive growth.
In this regard, the mission advises the authorities to ensure that the corporate governance framework, and transparency measures. Also, the mission urges for financial reporting, and oversight mechanisms that adhere to international standards and best practices.
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