IMF Endorses RBZ Foreign Currency Auction System

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RBZ Governor John Mangudya

THE International Monetary Fund (IMF) has thrown weight behind the Reserve Bank of Zimbabwe foreign exchange auction system amid calls to consolidate the current gains and accelerate reforms.

Marking the end of the institution’s virtual staff visit with the Zimbabwe authorities between June 1 and 15 June, 2021 to discuss recent economic developments and the economic outlook, the mission applauded economic reforms currently underway.

“The mission notes the authorities’ efforts to stabilise the local currency and lower inflation. In this regard, contained budget deficits and reserve money growth, as well as the introduction of a foreign exchange auction system, are policy measures in the right direction,” said IMF.

The Bretton Woods institution said further efforts are however needed to solidify the stabilisation trends and accelerate reforms.

It underscored that the near-term macroeconomic imperative is to improve the coordination among fiscal, foreign exchange and monetary policies, while addressing Covid-19 related economic and humanitarian challenges.

Recently, the World Bank credited Zimbabwe’s monetary authorities for implementing sound exchange rate policies that have led to relative stability on the local currency.

“The government’s efforts to stabilise prices through prudent fiscal policy and rules-based monetary and exchange rate policies have been effective and must be continued to enhance confidence and improve macroeconomic conditions,” said the global financier.

Since 2018, the government has been implementing a raft of measures aimed at stabilising the economy.

In June 2020, the Reserve Bank of Zimbabwe (RBZ) introduced the Foreign Exchange Auction platform alongside other cutthroat measures which were meant to tame a volatile exchange system.

These involved plugging leakages within the country’s mobile money transfer sector.

Yearly inflation rates have since fallen from a high of 837 % to the current 194 % as at April 30, 2021 amid the slowdown of the Zimbabwe dollar depreciation on both the parallel and official exchange rate markets.

Several listed companies and banks have since acknowledged the platform’s impact in creating an enabling business environment with a predictable planning timeframes. newzimbabwe

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