Zimbabwe economic crisis may escalate further

Significance

Since the abandonment of the multi-currency regime in June, the new Zimbabwe dollar has lost almost 60% of its value relative to the US dollar. The parallel market for foreign currency has re-emerged, forcing the authorities to adopt increasingly draconian measures to enforce the use of the new currency. Meanwhile, more than half of Zimbabweans are at risk of being food insecure.

Impacts

• Despite hiring several international public relations firms, Harare will continue to suffer reputationally amid a renewed crackdown.
• As the authorities attempt to support the Zimbabwe dollar and re-balance the fiscal deficit, further austerity measures are likely.
• While Harare hopes austerity measures will help regain IMF confidence, a new funding programme in early 2020 is now unlikely.