The United States embassy in Harare on Monday said central bank independence and fiscal transparency are primarily important in reviving Zimbabwe’s economy which is grappling with its worst crisis. The prices of basic commodities have been rising in the southern African nation over the past months as shortages of hard currency deepened.
“Central bank (Reserve Bank of Zimbabwe) independence and fiscal transparency are essential to economic stability,” the US embassy in Harare said in a tweet. “Without this, favored firms corruptly profit from the foreign exchange spread between official and black markets. Everyone else watches the value of their earnings disappear.”
In 2009, Zimbabwe abandoned the use of its own dollar as it was valueless opting for the US Dollar which dominated the multi-currency regime. However, in June 2019, as part of its currency reforms abolished the multicurrency system and re introduced the Zimdollar.
Zimbabweans are now in the game of converting money into US Dollars because the money in their banks is not storing the value. The Zimbabwe dollar which started trading at Z$2.50 against the US Dollar has now lost its value. Late last year, at a pre-budget seminar, Zimbabwe National Chamber of Commerce chief executive officer Christopher Mugaga, said the same statement about the need for apex bank to operate independently.
“The independence of a central bank appears compromised even the currency you are trying to introduce and have it fully fledged it’s always impossible. It’s always important to give full monetary authority to RBZ because at times the way our central bank behaves you will think it may have pressure from politicians,” he said.
Also, IMF has been lobbying the country to have an independent central bank to avert the risk of the Zimbabwe plunging into hyperinflation every 10 years as the current situation was a result of failure on government’s part to wean off the central bank.