Zimbabwe Needs to Intensify Reform Efforts & Meaningfully Improve Transparency: IMF

Last updated on September 11th, 2021 at 03:20 pm

On Thursday the International Monetary Fund said Zimbabwe needed to intensify its efforts to reform the country’s economic and political fate and improve meaningfully on transparency. The warning according to VOA came on the same day as a report by the Financial Times said the government was warned against state payouts to local company Sakunda Holdings because they were undermining trust in the economy.

According to VOA:

A source with knowledge of the Sakunda transactions told Reuters the IMF had raised a red flag over the central bank’s preferential treatment of $366 million of Treasury bills issued to Sakunda in January.

Zimbabwe, which adopted the U.S. dollar as legal tender in 2009, launched a transitional currency in February and converted all its domestic foreign-currency debt to local currency at a ratio of 1:1. But Sakunda’s bills remained denominated in U.S. dollars, the source added.

Sakunda then redeemed $330 million of the bills in July and was paid more than 3 billion Zimbabwe dollars by the central bank, according to the source.

The IMF has this to say about the need to reform the economy when they visited Zimbabwe in September 2019:

Policy actions are urgently needed to tackle the root causes of economic instability and enable private-sector led growth,

The key challenge is to contain fiscal spending consistent with non-inflationary financing and tighten monetary policy to stabilise the exchange rate and start rebuilding confidence in the national currency.