The Zimbabwean Government is tempted to print money due to the refusal of multilateral lenders to lend the country more money as the southern African nation faces economic meltdown.
Permanent Secretary in the Ministry of Finance and Economic Development George Guvatanga told Bloomberg that it is proving difficult to run the country’s economy without external support. He said:
It is very difficult to run the economy without any external support. You need a buffer to support you and without it that’s where the temptation to print money comes.
Zimbabwe has been shunned by multilateral lenders since defaulting on payments in 1999. However, the country still owes $7.66 billion to various international financial institutions
The country’s creditors include the World Bank, the European Investment Bank, the Paris Club and the African Development Bank.
Zimbabwe has been excluded from official bailouts and debt relief extended to other countries in the wake of the coronavirus pandemic and is relying largely on grants from donors to deal with the subsequent health crisis.
Guvamatanga said Zimbabwe is now frustrated by its lenders’ tendency to make new demands after it meets previous arrangements. He said:
Its been a frustrating exercise; you tick off items on the list and then you get given a new list… Most of our engagement is around technical support. We would want to push it beyond that.
The Treasury official told Bloomberg that Zimbabwe has met all the agreed economic benchmarks and this was enough for the lenders to reconsider their stance.