Business Reporter
THE International Monetary Fund’s (IMF) has urged Zimbabwe to urgently work towards revamping the ZWL stability and eliminate exchange rates volatilities bedeviling the economy.
In a statement to mark the end of the two weeks long visit , the IMF delegation took a swipe on the local currency challenges obtaining in the economy.
“Local currency ZWL instability has intensified: the official exchange rate has depreciated by about 95% since the beginning of December 2023: the gap to the parallel market rate remains wide above 30% and ZWL inflation is very high.
“This instability weighs on sentiment while exchange rate restrictions prescribing retailers to use the official ZWL exchange rate with up to a 10% margin-inflating US$ prices continue to be a burden on the formal sector,” said the delegation in a statement.
The reputable institution observed that instability promotes informality, eroding the tax base and undermining longer growth prospects with the risks remain skewed to the downside and the outlook will crucially depend on progress towards macroeconomic stabilization and transformational structural reforms.
They called for the urgent need to addressing the sources fiscal pressures including Quasi Fiscal Operations of the Reserve Bank of Zimbabwe (RBZ) highlighting the urgent need to amend the law in order to align the central bank to its core mandate.
“Structural reforms aimed at improving the business climate, strengthening economic governance and reducing corruption vulnerabilities are key for promoting sustained and inclusive growth and bode well and bode well for supporting Zimbabwe’s development objectives embodied in the country’s National Development Strategy 1 (2021 – 2025),” the IMF said.
The delegation which visited Harare on January 31 – February 14 2024 also discussed the Authorities request for a Staff Monitored Program (SMP) and commence 2024, to discuss the authorities request for a Staff Monitored Program and commence 2024 Article IV Consultation.
