President Emmerson Mnangagwa has directed Zimbabwe's central bank to stop foreign currency borrowing to help fight currency depreciation.
"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 is quoted as saying by media.
Previously, the Reserve Bank of Zimbabwe used to borrow from regional banks in order to fund imports of fuel, fertilizers, and other basic goods. However, some analysts suggest that the central bank was exacerbating the raging currency crisis by borrowing foreign currency without parliamentary oversight.
Currently, the country is battling with surging inflation, while the Zimdollar has weakened by over 80% since the beginning of the year. The country's website monitoring exchange rates showed that the local currency has plummeted in value by almost 60% this month alone.
In May, in an attempt to stop the currency from sinking, the Zimbabwean government introduced a series of reforms that included full withholding of domestic foreign exchange earnings and the acceptance of all foreign loans by the Ministry of Finance and Economic Development, instead of the central bank.
According to the country's Finance Minister Mthuli Ncube, Zimbabwe initiated these reforms in order to stabilize its currency, which is facing "enormous pressure" as domestic inflation is triggered by demand for US dollars.
The country's authorities are making efforts to resolve these issues. In particular, to enhance the sourcing of basic goods, the government abolished the requirement for import licenses and allowed all basic goods to come into the country without import duties and taxes.