Economists back IMF call for monocurrency

Tapiwanashe Mangwiro

Zimpapers Business Hub

ANALYSTS have thrown their weight behind the International Monetary Fund (IMF)’s call for a monocurrency regime in Zimbabwe, saying this would grant the Reserve Bank of Zimbabwe (RBZ) full control of all key levers to shape the country’s economic trajectory.

Under the multicurrency regime, dominated by the US dollar and Zimbabwe Gold (ZiG), experts believe the monetary authorities have limited influence.

Zimbabwe has been using a multicurrency regime since 2019, when it reintroduced the domestic unit it had abandoned in 2008 due to hyperinflation.

Monetary and fiscal policies are crucial instruments for determining a nation’s economic health, working together to maintain stability and promote growth.

They aim to achieve sustainable economic growth, low unemployment, and stable prices.

IMF mission chief, Wojciech Maliszewski, in the country for the Article IV Mission, recently met President Emmerson Mnangagwa at State House and applauded the Government’s progress in stabilising the domestic currency.

After that meeting, he explained that the ZiG had achieved a level of stability sufficient to become the country’s sole legal tender, provided a deeper foreign-exchange market was developed to ensure full price discovery and eliminate parallel market distortions.

Mr Maliszewski said the ZiG had stabilised, hence he would like to see the currency become the sole national currency by also becoming more widely used.

Authorities say the ZiG, introduced last year to replace the inflation-weary Zimbabwe dollar, accounts for about 30 percent of transactions in the economy, while the balance is conducted in US dollars.

“For this, there are several measures that need to be in place, but first and foremost, we would like to see a deeper forex market that would make sure that there is full price discovery in the market.

“Right now, we see good stability in the official market, and we also see a convergence between the parallel market rate and the official rate, but ideally and ultimately, we would like to see an elimination of this gap,” he said.

Economist Gladys Shumbambiri-Mutsopotsi concurred that monocurrency could strengthen Zimbabwe’s monetary policy. She observed that under the current system, the RBZ’s toolkit had been limited by the coexistence of multiple currencies.

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