Zimbabwe is going through a rare phase of relative economic ‘calm’. Growth feels steady, inflation has slightly cooled, and the exchange rate is holding, for now. But risks from unpaid debts and a 2030 currency deadline raise questions. In this report, Imara Asset Management CEOShelton Sibandaand non-executive directorJohn Legatpose a familiar question: can those running the economy resist their old urges: tinkering with the currency and spending money that they don’t have? Excerpts:
As far as we can see, the economy remains in great shape and ‘stable’. We are logging historic gold numbers on the back of firmer pricing; record volumes within the tobacco segment and platinum prices have also rebounded extensively.
A free and widespread use of the USD within the economy, accompanied by a non-existent ZWG, has made it easier for corporates and individuals to transact and plan. Let’s not rock the boat. The ZiG portion in monetary aggregates is less than 20%, implying an even smaller amount available for transactions where prices remain exclusively quoted in USD. Yet, fragility remains. Debt levels are unsustainable, and the country is deemed to be in debt distress. On the fiscal side, due to financing pressures, there is an accumulation of domestic arrears now reportedly in excess of US$1 billion.
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Source: NewZWire
