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World Bank warns Zimbabwe needs predictable policy to support currency

Published

10 months ago

March 2, 2024

A senior World Bank official has revealed that Zimbabwe must increase the predictability of its monetary and fiscal policies in order to restore confidence in its declining currency value.

The World Bank’s Regional Vice President for Eastern and Southern Africa, Victoria Kwakwa, told journalists in an interview that the country may advance by straying from the central bank’s “quasi-fiscal operations.”

After ten years of dollarization, the local currency was reintroduced in 2019, but it quickly lost value, leading authorities to quickly approve the use of foreign currencies in domestic transactions. The finance ministry and central bank announced last month that they were working on ways to stabilise the value of the currency and that they were thinking of, among other things, tying the exchange rate to the price of gold.

“Policy predictability… the improvements that are being made moving away from quasi-fiscal operations, all of that will contribute to building greater confidence,” Kwakwa said.

She stated that the World Bank is “committed” to the ongoing process that has been in place since 2022 for Zimbabwe to pay off billions of dollars in arrears to the organisation and other international lenders.

Kwakwa, meantime, expressed her “delight” at the news that China and India had reached debt restructuring deals with neighbouring Zambia. The President of Zambia announced the accords last week, raising optimism that Zambia would be on the verge of exiting its more than three-year default.

“With the official creditors out of the way, the government has a chance now to focus more on getting an agreement with the commercial creditors. And we hope that that will also be in the offing soon,” she said.

The International Monetary Fund (IMF) stated last month that the central bank should cut back on its non-core operations, which have included printing money and borrowing to lend to the government, though she did not specify what those operations were.

With annual inflation at 47.6% and the Zimbabwean currency having lost over 60% of its value against the US dollar thus far this year, the nation is still reeling from the memory of hyperinflation under longstanding former leader Robert Mugabe.

“That’s at the heart of the problem—the fact that there hasn’t been confidence. And every time people get (the currency), they try to get rid of it to get something else, and so it’s constantly losing value.”

Related Topics:Featured World Bank Zambia Zimbabwe

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Moroccan annual inflation rises to 0.8% in November

Published

21 hours ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

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Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

2 days ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”