Zimbabwean Bond Notes/Bloomberg
Mthuli Ncube, the Finance Minister, said that having a reference rate will help the country manage monetary policy.
Sunday 14, April 2019
(Bloomberg) –Zimbabwe’s finance minister said that the Southern African nation will soon introduce a central bank reference rate as part of measures to prop up the collapsing economy.
The nation also plans to introduce a new, fully fledged currency in the next 12 months and to close the gap between the rate for dollars in the official and parallel markets using RTGS dollars, which the government introduced in February.
The measures come as the government scrambles to end a currency shortage that has pushed inflation to the highest rate since 2008 and sparked shortages of fuel and bread. The troubles stem from the country abandoning the Zimbabwe dollar in 2009, after a bout of hyperinflation, in favour of the greenback. In 2016, it introduced the bond notes, which aren’t accepted outside the country, to fund rampant spending.
The annual inflation rate is at its highest since a hyperinflation episode in 2008, but month-on-month price growth slowed to 1.7 per cent in February from 10.8 per cent a month earlier.
While Zimbabwe’s estimated economic expansion of four per cent was less than the target the government had set itself, fourth-quarter revenue of $1.69 billion exceeded a goal of $1.18 billion, the Ministry of Finance said.