IMF: Adoption Of Zimbabwe Dollar Is Sovereign Decision By Zim Govt

The International Monetary Fund (IMF) has said that the adoption of the Zimbabwe Dollar as sole tender is a sovereign decision by the Zimbabwe government. This comes after Zimbabwe introduced Statutory Instrument 142 of 2019 which bans the use of all foreign currencies for domestic transactions.

IMF representative to Zimbabwe, Patrick Imam, yesterday said that the Fund welcomes authorities’ implementation of and continued commitment to fiscal and monetary restraint. He said:

The adoption of the Zimbabwe dollar as sole legal tender is a sovereign decision by the government of Zimbabwe.

The government has partnered with the IMF as it embarks on STP to create conditions which are aimed at inducing economic recovery.

A fortnight ago, the IMF urged monetary authorities to stop the practice of levying taxes in US dollars so as to reduce pressure on the exchange rate by increasing demand on the RTGS$.

The IMF also recommended that the official exchange rate should be determined by the market on a willing-buyer-willing-seller basis. The IMF said:

This can be done by allowing FX (forex) earners to sell their FX surrender requirements directly in the foreign exchange market. This would help boost confidence, facilitate improved price discovery, and reduce FX market distortions.

Iman is also of the view that the printing of bond note could marginally decrease inflation because the speed of circulation of physical money is much lower than that of electronic money. He, however, cautioned that some would avoid the 2% tax by using a lot of bond notes.

More: The Standard