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Mnangagwa: 'No More Borrowing Foreign Currency!'

FILE: In this picture from Jan. 11, 2022, a foreign currency dealer counts U.S. dollar notes at an exchange.

HARARE — Zimbabwe's President Emmerson Mnangagwa has ordered the central bank to stop foreign currency borrowing, as the government battles to contain a plunge in the local currency ahead of a general election.

"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 said in a statement issued late Thursday.

The central bank has in the past borrowed from regional banks to fund imports of fuel, fertilizer, edible oils and other basic goods.

Some analysts had argued that the central bank was compounding the country's currency crisis through foreign currency borrowing that was not under parliamentary oversight.

President Mnangagwa faces a tough bid for re-election in an Aug. 23 vote amid surging inflation and a Zimdollar that has weakened by more than 80% since the beginning of the year.

The government recently announced a raft of measures to stabilize the Zimdollar and tame inflation, including transferring some functions of the central bank to the finance ministry.

The southern African country has seen bouts of hyperinflation and currency volatility over the past 20 years, blamed on the government's poor handling of the economy and policies such as former president Robert Mugabe's seizure of farms from whites to resettle landless Blacks.