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Central Bank Quasi-Fiscal Losses and High Inflation in Zimbabwe: A Note

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  • Ms. Sònia Muñoz

Abstract

Zimbabwe's failure to address continuing central bank quasi-fiscal losses has interfered with both monetary management and the independence and credibility of the Reserve Bank of Zimbabwe (RBZ). Realized quasi-fiscal losses are estimated to have amounted to about 75 percent of GDP in 2006. Because they were financed by creating money creation or issuing RBZ securities, they contributed to the four-digit inflation reached in 2006. The remedy for the current situation is clearly to eliminate the causes of losses by implementing measures to improve the cash-flow of the bank and restore its financial position.

Suggested Citation

  • Ms. Sònia Muñoz, 2007. "Central Bank Quasi-Fiscal Losses and High Inflation in Zimbabwe: A Note," IMF Working Papers 2007/098, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2007/098
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    References listed on IDEAS

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    Cited by:

    1. Mr. Jens R Clausen & Ms. Sharmini Coorey & Bakar Ould-Abdallah & Ms. Sònia Muñoz & Mr. Norbert Funke, 2007. "Lessons From High Inflation Epidsodes for Stabilizing the Economy in Zimbabwe," IMF Working Papers 2007/099, International Monetary Fund.
    2. Manoel Bittencourt, 2007. "Macroeconomic Performance and Inequality: Brazil 1983-1994," Ibero America Institute for Econ. Research (IAI) Discussion Papers 163, Ibero-America Institute for Economic Research.
    3. Julien Pinter, 2018. "Does Central Bank Financial Strength Really Matter for Inflation? The Key Role of the Fiscal Support," Open Economies Review, Springer, vol. 29(5), pages 911-952, November.
    4. Osama Sweidan, 2010. "Central bank inability and Taylor rule in developing countries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 57(4), pages 395-409, December.
    5. Singleton,John, 2010. "Central Banking in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521899093.
    6. Miller, Stephen Matteo & Ndhlela, Thandinkosi, 2020. "Money demand and seignorage maximization before the end of the Zimbabwean dollar," Journal of Macroeconomics, Elsevier, vol. 63(C).

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