A Financial Times article says that the government of Zimbabwe had been printing money to fund its spending. The newly agreed IMF-Zimbabwe Staff Monitored Programme (SMP) seeks to ensure that the government will not print any more money.
Zimbabwe’s central bank said it would stop printing money as part of a milestone deal with the IMF, which has agreed to monitor vital currency reforms in the southern African nation.
Under the terms of an IMF staff-monitored programme announced on Friday, President Emmerson Mnangagwa’s government will cease borrowing from the central bank to pay its bills, a practice that has exacerbated Zimbabwe’s debilitating currency crisis.
Money-printing has undermined Mr Mnangagwa’s pledge to make Zimbabwe “open for business” after the 2017 coup that overthrew Robert Mugabe, who led the country into penury under his long rule.
The IMF said stopping printing money was “critical to support the new currency” which was launched in February to tackle shortages of the US dollars that Zimbabwe has used since hyperinflation destroyed its original currency a decade ago.
The institution also said that “significant economic reforms were under way” in Zimbabwe, where the underperformance of the new currency called RTGS dollars has worsened shortages of fuel and other goods.
Last year the government borrowed the equivalent of more than half of its revenue from the money printing, though data indicate it has avoided tapping the central bank since December.
At the introduction of the Bond Note in 2016, Reserve Bank governor, John Mangudya assured the nation that the government would not print any more not backed by the Afreximbank guarantee that it had secured.