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Browsing: Monetary Policy
In the last 20 years, Africa’s external debt has grown fivefold to about $700 billion. According to Chatham House, a policy centre in London, Chinese lenders account for about 12 per cent of that amount. As of November 2022, the International Monetary Fund (IMF) and the World Bank considered 22 low-income African countries to either be in debt distress or facing potential external debt distress.…
Countries must continue to work to mitigate their vulnerabilities over time. This involves minimizing balance-sheet misalignments, establishing money and foreign exchange markets, and lowering exchange rate passthrough by increasing monetary policy credibility.
However, in the short term—while vulnerabilities remain high—the use of extra instruments may assist relieve short-term policy trade-offs when certain shocks occur. In particular, foreign exchange intervention, macroprudential policy measures, and capital flow controls may help increase monetary and fiscal policy autonomy, promote financial and price stability, and minimize output volatility if reserves are enough and these instruments are available.…
Changes in monetary policy may have a substantial influence on all asset classes. However, by understanding the subtleties of monetary policy, investors may position their portfolios to profit from policy shifts and increase returns.…
Zambia has dealt with the legacy of years of economic mismanagement, with an especially inefficient public investment drive. Zambia has been in debt distress. Therefore, the country needed a deep and comprehensive debt treatment to place public debt on a sustainable path.…
- Zimbabwe did not have a parallel market for foreign exchange in the years running from 2009 to around 2016.
- Zimbabwe is heavily reliant on imported products and expends more foreign currency than it can afford.
- Demand pressure has contributed to the fall of the Zimbabwe dollar resulting in general inflation.
To dollarize or not to dollarize?
This question has robbed monetary authorities of sleep as the Zimbabwe dollar falls precipitously on the parallel market.
Zimbabwe did not have a parallel market for foreign exchange in the years running from 2009 to around 2016.
It all began with the introduction of a surrogate currency that was fallaciously pegged at par with the United States dollar. The authorities initially posited that the surrogate currency was supported by a loan facility extended by the Africa Export-Import Bank (Afrexim Bank).
This loan it was said underscored the parity of the currency. It did not …