Zimbabwe’s President, Emmerson Mnangagwa, has instructed the Reserve Bank of Zimbabwe (RBZ) to stop foreign currency borrowing, as the country grapples with a plummeting local currency ahead of a general election. Mnangagwa said in a statement issued late on Thursday:
The (central) bank shall only borrow foreign currency on behalf of the state at the instance of the (Finance) Minister and not on its own behalf.
Mnangagwa faces a challenging re-election bid on August 23rd, given the rising inflation and the Zimdollar’s more than 80% depreciation since the start of the year.
Some analysts have argued that the central bank’s foreign currency borrowing, which is not subject to parliamentary oversight, has aggravated the country’s currency crisis.
Mnangagwa stated that the central bank shall only borrow foreign currency on behalf of the state at the Finance Minister’s behest and not on its own behalf.
In the past, the central bank has borrowed from regional banks to finance imports of fuel, fertilizer, edible oils, and other basic goods. The government has recently taken measures to stabilise the Zimbabwe dollar and control inflation, including transferring certain responsibilities of the central bank to the finance ministry.
Zimbabwe has experienced spells of hyperinflation and currency volatility over the past two decades, which have been blamed on the government’s poor economic management and policies such as the seizure of farms from white farmers by former President Robert Mugabe to resettle landless Black people.