Zimbabwe Strikes A Deal With The IMF To Stop Printing Money
By CultureBanx Team
The IMF will monitor vital currency reforms for Zimbabwe’s Central Bank
3 years ago, Zimbabwe paid off more than $100M of arrears on IMF loans
The International Monetary Fund (IMF) has thrown a life-saver to Zimbabwe by dispensing currency reform advice, not loans, as long as they stop printing money. For decades Zimbabwe has buckled under the weight of astronomical levels of inflation due to its debilitating currency crisis.
Why This Matters: In April, the country’s central bank decided to introduce yet another currency into its already crippled financial system called RTGS that’s fallen in value since it launched. The BBC reported at its height prices were almost doubling every day and the central bank printed notes worth 100 trillion Zimbabwe dollars to try and keep up.
Under, the new IMF program the country’s currency struggles should get better because they have to stop taking on new debt from foreign lenders. Three years ago, Zimbabwe paid off more than $100 million of arrears on IMF loans, but it is still in default on debts to other international lenders.
Zimbabweans have been able to use foreign currencies like the U.S. dollar and the South African rand to purchase goods. All of these currencies have a different exchange rate, meaning customers were charged different prices depending on what payment method they chose. In a sign of the widening distrust of the new RTGS currency, supermarkets recently moved to set prices in U.S. dollars.
Situational Awareness: Following a coup in 2017 Zimbabweans turned to cryptocurrencies in an effort to preserve the value of their cash out of fear that hyperinflation would re-emerge. Later, the Reserve Bank of Zimbabwe dealt a major blow to the country’s cryptocurrency industry by banning their recognition at all financial institutions. Cryptocurrencies have been a popular form of bridging gaps in the availability of cash in the country. Perhaps they may want to re-consider this ban.
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