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IMF staff tell Zim to accelerate FX market reform


Oct 27, 2023

By ETimes

HARARE –   The International Monetary Fund (IMF) flagged the pressing need for Zimbabwe to immediately expedite forex market reforms in order to fully restore macroeconomic stability.

It comes as policymakers have been refining the auction system in a bid to close the gap between the official and parallel market.

“There is an urgent need to accelerate the FX market reform, by allowing more flexibility in the official exchange rate through a more transparent and market-driven price discovery; removing the restrictions on the exchange rate at which banks, authorized dealers, and businesses can transact; and further minimizing export surrender requirements,” an IMF staff team led by Wojciech Maliszewski said in a statement last night.

In its resolutions of the monetary policy committee meeting held on 23 October 2023, the central bank revealed that starting on November 1, 2023, all export sectors will have foreign currency retentions on exports standardised at a rate of 75%, and all special dispensations provided to certain sectors of the economy will be eliminated.

RBZ said it is still necessary to fully resolve the RBZ’s quasi-fiscal operations (QFOs) in order to relieve liquidity constraints and reestablish inflation expectations.

“These measures should be complemented with an enhanced liquidity management framework, including through the use of appropriate interest-bearing instruments by the RBZ to mop up excess liquidity,” reads the statement.

“Second, the consolidated fiscal stance, including QFOs, should be aligned with the short-term stabilization objectives.”

In 2024, the IMF expects the southern African nation’s economic growth to drop to 3.5% owing to a decline in the demand for minerals globally and a weather-related slowdown in the agricultural sector.

By ETimes

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