Zimbabwe had a rare dose of good news last week when an International Monetary Fund (IMF) team concluded a regular economic health check and noted that progress on that front represented “regime change.”
Wojciech Maliszewski, who led the team, said the conduct of the Reserve Bank of Zimbabwe (RBZ), which for a long time was accused of fuelling inflation by printing money to finance the government, was the most impressive. The central bank is no longer printing money to finance the government, it was noted.
Zimbabwe is pushing for an IMF staff-monitored programme, which could lift confidence in the country and provide a stepping stone to restructuring its US$21 billion debt overhang, which has locked out of global financial markets since it defaulted in 1999.
The IMF observation came on the back of reports that Zimbabwe had asked South Africa for help in getting its debt reworked under the Group of 20 Common Frame Work. South Africa currently chairs the G20.
Zimbabwe has been pushing for debt relief under the Arrears Clearance and Debt Resolution Process that is being championed by African Development Bank (AfDB) president Akinwimi Adesina and the IMF positive assessment could give the initiative a boost.
The IMF team declined to say if or when the Bretton Woods institution would consider granting Zimbabwe the staff monitored programme, but emphasised that it “requires a lot of effort, a lot of time from both us and the authorities on the other side.”
More significantly, the IMF voiced its support for the Zimbabwe Gold (ZiG) currency and said it would be ideal for it to be “fully becoming a national currency.”
The ZiG was the sixth attempt by Zimbabwe to re-launch the local currency since 2009 when a bout of record hyperinflation forced the authorities to dump the Zimbabwe dollar in favour of a basket of currency.
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Despite the multiple attempts to revive the local currency, including the launch of the ZiG in April last year, the US dollar still serves as the country’s primary currency with indications that about 80% of the country’s transactions are using greenbacks.
However, the majority of Zimbabweans still get their income in the local currency.
The introduction of the ZiG has done little to alleviate the challenges common people were facing before the currency reforms.
As a result of the RBZ tight monetary policy, the ZiG does not circulate among ordinary people. This means that the majority of Zimbabweans are not benefiting from the economic progress that institutions such as the IMF are noticing.
For the progress on the economy to make sense, it must impact the common person and be tangible.
