Zimbabwe Urged to Boost Confidence in Currency by World Bank Official
Challenges in Zimbabwe’s Fiscal and Monetary Policy
Zimbabwe is facing challenges in its fiscal and monetary policies, leading to a lack of confidence in its depreciating currency. According to a senior World Bank official, making these policies more predictable is crucial to restoring trust in the economy.
Addressing Central Bank Operations
The World Bank’s Regional Vice President for Eastern and Southern Africa highlighted the need to move away from the central bank’s “quasi-fiscal operations” to improve the situation. These operations, which involve activities like printing money and lending to the government, should be reduced to stabilize the currency.
Current Economic Situation
Zimbabwe has witnessed a significant decline in the value of its currency against the U.S. dollar, coupled with high inflation rates. This instability has eroded public confidence in the local currency, causing people to seek alternatives for their transactions.
Efforts to Stabilize the Currency
The government is working on measures to stabilize the currency, including possibly linking the exchange rate to the price of gold. Policy predictability and moving away from quasi-fiscal operations are seen as crucial steps towards building confidence in the economy.
Debt Arrears Clearance
The World Bank is actively supporting Zimbabwe in clearing its debt arrears to international lenders, a process that has been ongoing since 2022. This initiative is essential for the country’s financial recovery and economic stability.
Debt Restructuring in Zambia
Recent debt restructuring agreements signed by China and India with Zambia have raised hopes for the country’s recovery from default. With official creditors on board, Zambia now aims to negotiate with commercial creditors to further stabilize its financial situation.
