Zimbabwe needs a comprehensive policy package and structural reforms to address the fiscal challenges which the introduction of bond notes alone cannot solve, the International Monetary Fund (IMF) has said.
The introduction of the surrogate currency in November last year heralded the return of a local bill — as an export incentive under a $200 million Afreximbank bond facility — but the notes have failed to plug a chronic banknote shortage.
Without financial support from international lenders for over 15 years, the southern-African nation’s response to the deep liquidity crunch has failed to impress the IMF.
“Zimbabwe is in a very, very difficult situation, as you know. There’s a limited amount of foreign exchange inflows coming in and no monetary policy tool. So, they are in difficult circumstances right now”, said the director of the IMF’s African Department Abebe Aemro Selassie, in an address to journalists .
“We think that, going down this one note route, in and of itself, will not address the challenges that the country has. So, it’s very important to have a more comprehensive policy package which also addresses a lot of the fiscal challenges that the country faces, a lot of the structural reforms that have to be done,” he said.
Zimbabwe has successfully undertaken three Staff Monitored Programs (SMPs) under the IMF since 2013 to monitor the implementation of economic reforms.
Under the SMPs, the policy reform agenda focused on balancing the primary fiscal accounts, improving the investment climate, restoring confidence in Zimbabwe’s financial sector and garnering support for a strategy to clear arrears with multilateral institutions.
“So, it’s more of a holistic package of reforms that are required to get Zimbabwe out of the place it’s in right now,” said Selassie. – The Source