The International Monetary Fund (IMF) has expressed concerns over the Reserve Bank of Zimbabwe's (RBZ) quasi-fiscal operations, urging the country to terminate these activities that previously led to hyperinflation from 2006 to 2008. The IMF's warning follows its October visit, during which it noted Zimbabwe's non-implementation of proposed economic policy reforms.
In an attempt to manage inflation expectations and mitigate liquidity pressures, the IMF underscored the need to rectify RBZ's quasi-fiscal activities. It suggested replacing RBZ's gold coins and digital tokens with interest-bearing assets to handle excess liquidity. Additionally, the IMF advised aligning fiscal positions with short-term stabilization objectives and urgently overhauling the foreign exchange market.
Amidst a backdrop of economic instability and a multi-currency regime, these steps are seen as significant moves towards macroeconomic stability for Zimbabwe. Despite forecasting a 4.8% economic growth for Zimbabwe in 2023, driven by mining and agriculture, the IMF expects this figure to decline to 3.5% in 2024 due to fluctuations in global demand and weather-induced agricultural slowdowns.
The IMF has also highlighted the need for structural reforms, liquidity management enhancement, foreign exchange market reform, addressing Zimbabwe's debt overhang, tackling high inflation rates, improving the business climate, revenue mobilization, expenditure control, and economic governance. The organization also emphasized the importance of accurate macroeconomic statistics as Zimbabwe grapples with social challenges such as poverty, inequality, unemployment, and a parallel foreign exchange market in the wake of the COVID-19 pandemic.
The IMF's technical assistance could prove beneficial for Zimbabwe as it seeks to navigate these challenges and work towards economic stability.
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