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THE International Monetary Fund (IMF) has put a seal of approval on Zimbabwe’s macroeconomic policies after the global lender praised the reduced reliance on central bank financing.
The multilateral lender underscored the need to sustain the transformative policies to secure long-term economic stability.
The IMF observed that the Government, through the Reserve Bank of Zimbabwe (RBZ), has significantly curtailed its historical tendency to turn to the central bank for funding, which destabilised the economy.
“It will be important for Zimbabwe to sustain that (policy regime) because it’s this repeated recourse to central bank financing that has created a lot of difficulties in the past also with inflation, with exchange rate volatility and the difficult foreign exchange environment that the country has,” IMF African Department director Mr Abebe Aemro Selassie told the media during the presentation of the lender’s latest Regional Economic Outlook for Sub-Saharan Africa on Thursday.
“So, we are encouraged by what the Government has been doing in recent months, and I think that needs to be sustained. Like all countries, a combination of current policies and continued refinement of policies will be key to helping Zimbabwe move forward.”
Economic analysts say Zimbabwe must continue on the new-found path.
“What the IMF is basically saying is that the green shoots of stability are welcome, but Zimbabwe must remain on a tightrope of reform,” economist Mr Tobias Musara said.
“Slipping back into the easy, inflationary habits of the past would rapidly undo the recent progress, plunging the country back into the difficulties of high inflation and currency turmoil.
“Sustained discipline, therefore, is the non-negotiable key to helping the nation move forward.”
The RBZ has taken a crucial step towards establishing the fiscal discipline necessary for durable macroeconomic stability.
Mr Musara said the emphasis on the need to sustain the policy direction highlights the IMF’s view that temporary policy fixes would be insufficient.
“Zimbabwe’s economic credibility hinges on demonstrating a permanent break from the inflationary financing model of the past,” said Mr Musara.
Like all countries, Zimbabwe’s progress will depend on a combination of current policies and continued refinement of policies.
This means more than just limiting central bank borrowing; it requires a holistic approach to managing the economy, including maintaining budget discipline and financing expenditures through sustainable, non-inflationary means.
Finance, Economic Development and Investment Promotion Permanent Secretary Mr George Guvamatanga recently noted that the economy was experiencing its longest period of stability since the advent of the Second Republic
“The economy has recorded its longest streak, if I may put it that way, of said uninterrupted stability since the measures the Government took in September of 2024,” said Mr Guvamatanga.
Zimbabwe Gold (ZiG) is currently trading at approximately 26,71 per US dollar.
It has maintained a relatively stable trajectory since the central bank devalued the currency by 43 percent on September 27, 2024 to address pricing distortions in the economy.
Reserve Bank of Zimbabwe Governor Dr John Mushayavanhu, upon taking office in April last year, made a strong pledge to stop the practice of printing money to fund Government expenditures.
He emphasised that his mandate, as defined in the Reserve Bank Act, was strictly discharging his monetary policy duties, and had no intention of encroaching on the duties of other Government departments.
He promised to stick to the central bank’s core job and ensure there is no printing of money to finance projects the Government would ordinarily fund through taxes or borrowing.
In its recent Article IV consultation, the IMF Executive Board formally acknowledged that the decisive end of quasi-fiscal operations and monetary financing was the key development that has allowed Zimbabwe to achieve macroeconomic stability and lower inflation.
Tinaye Agere