IMF Tells Zim What To Do For New Currency To Work

The International Monetary Fund (IMF) said that strengthening the independence of the Reserve Bank of Zimbabwe (RBZ) will go a long way in improving governance and help stakeholders gain confidence in the new currency.

This was said by the IMF Resident Representative for Zimbabwe Patrick Amir Imam in an interview with Business Times.

His remarks follow the announcement made by Finance and Economic Development minister Mthuli Ncube in April that Zimbabwe will have a fully-fledged currency within 12 months. Said, Imam:

Having said all this, strengthening the independence of the RBZ and improving its governance and controls will further help to gain confidence in the new currency.

… Thus, improving the governance and financial autonomy are prerequisites for a more independent central bank to conduct monetary policy, and will help further the stability of the new currency.

Imam added that the country’s currency will either work on not work depending on the existing conditions. He said:

The history of Zimbabwe has shown that a dollarised system can succeed as it did after the hyperinflation period, when the right conditions were in place, or that it can fail, as it did in the past two years when the pre-requisites are lacking.

Similarly, Zimbabwe’s history also illustrates that having one’s own currency can work, as it did after Independence, or fail, as it did in 2008/09, depending on whether the macroeconomic conditions for stability are in place.

More: Business Times

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