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IMF backs Zimbabwe’s currency reforms

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IMF backs Zimbabwe’s currency reforms

Currency

IMF Director of Communications, Gerry Rice, said this in a statement on Friday in Harare.

Rice said that robust economic reforms were required for Zimbabwe to address a deep macroeconomic imbalance challenge, as well as a broader set of social and economic challenges.

He said although the IMF does not have a financing programme with Zimbabwe, it continues to discuss with Zimbabwean authorities to assist in implementing economic reforms that are greatly needed to revive the ailing economy.

Rice said the move by the central bank to abandon the prevailing rate of 1:1 between the U.S. dollar and the surrogate bond note and allow the exchange rate to float was a welcome move to address distortions that have impacted on the economy.

“The currency reforms’ success will depend on the implementation of an effective overall monetary policy framework supported by market-determined interest and exchange rates, together with prudent fiscal policies,” Rice said.

The Reserve Bank of Zimbabwe two weeks ago introduced the foreign exchange inter-bank market where the local currency, encompassing the Real Time Gross Settlement balances, bond notes and coins will now be traded with the U.S. dollar and other currencies at market rates.

The central bank pegged the opening rate at 2.50 against the U.S. dollar, slightly lower than black market rates of 3.60.

Rice said the IMF would maintain engagement with the struggling southern African country to offer support.

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