Interim President Delcy Rodriguez has asked IMF Managing Director Kristalina Georgieva for access to $5 billion in special drawing rights (SDRs) that Venezuela holds. This would be used for infrastructure, electricity, and water improvements.

The new administration has also opened the energy sector to foreign investment. Shell will develop the Loran field, which had been abandoned for 23 years, and comprises seven natural gas deposits, with six of them straddling the maritime border with Trinidad and Tobago. As per Rodriguez, the project would allow Venezuela ‘to take a very important step forward in its gas development, and also as a gas exporter’.

After taking over Venezuela’s reigns post the US-staged arrest of controversial president Nicholas Maduro, the Rodriguez government has identified the Latin American country’s huge energy reserves as one of the routes to help the nation escape its economic abyss. Agreements have been signed with several of the world’s leading oil companies, including Britain’s BP and Spain’s Repsol.

Chavismo: A period of mixed opportunities

The 1999–2013 phase under Hugo Chavez was all about a massive, oil-fuelled expansion of social spending and poverty reduction, coupled with the erosion of long-term economic stability through nationalisations, rigid price controls, and extreme dependence on petroleum exports.

Under Chavez, Venezuela benefited from a historic surge in global oil prices, which skyrocketed from roughly $11 per barrel in 1998 to over $100 by the late 2000s. The influx of petrodollars allowed the administration to double domestic social spending. It heavily subsidising food, healthcare, and education, which significantly reduced poverty and income inequality during his presidency.

The Chavez administration nationalised major industries. In 2003, it brought forward stringent currency and exchange controls to prevent capital flight from the Latin American nation, alongside strict price controls on basic goods.

However, it missed a trick, by not using its oil wealth to diversify the domestic economy. By the end of Chavez’s term, petroleum accounted for 95% of Venezuela’s export revenues, and about half of all government income.

The move of purging state-run enterprises of experienced workers, and replacing them with political loyalists was another blunder, as the move hindered productivity. By the time of Chavez’s death in 2013, the foundation of the economy was critically damaged by rampant inflation, chronic shortages of basic goods, and an overvalued currency.

Chavez must be credited for sharing Venezuela’s vast oil wealth with the poor and disenfranchised. Chavismo (the term that defined the Chavez-led left-wing populist movement in Venezuela) witnessed the percentage of Venezuelans living below the poverty line falling to 36.3% in 2006 from 50.4% in 1998.

Infant mortality fell from 20.3 per thousand births when Chavez came to power, to 12.9 by 2011. The access to education was another massive plus for the country, with the number of children enrolled in secondary education rising from 48% in 1999 to 72% in 2010.

However, ‘Chavismo’ came at a cost, as the Latin American country had to reduce state-run oil company PDVSA to the status of a ‘piggy bank’, in order to sponsor the government’s social security projects, while neglecting oil infrastructure and production.

Maduro rule: The abyss kicks in

However, the real downfall happened in March 2013, as Nicholas Maduro took over the administration’s reigns immediately after Chavez’s death.

The domestic economy shrank 71% between 2012 and 2020, while inflation topped 130,000%. Its oil production, the beating heart of the country, dropped to the unthinkable less than 400,000 barrels a day.

Between 2013 and 2025, as per the World Bank and the IMF, approximately 80% of the country’s GDP evaporated, a figure that dwarfs what happened to the United States in the Great Depression (29%), and to the Soviet Union during its collapse.

Along with the structural fragility, Venezuela missed the opportunity to utilise sovereign wealth funds to sterilise the liquidity generating from its trade. Even though the Latin American nation had an entity called Macroeconomic Stabilization Fund (FEM), by 2014, the fund held less than $3 million.

As crude prices collapsed, Venezuela faced a choice between fiscal austerity or monetary expansion. As per Iranian freelance journalist Amirreza Etasi, a keen observer of Maduro’s economic missteps, the administration attempted to plug a fiscal gap, approaching 15% of GDP, not by cutting spending, but by expanding the monetary base.

As inflation ticked upward, the government attacked the symptom (prices) rather than the cause (liquidity). The 2014 ‘Fair Prices Act’ capped profit margins, and mandated sales below replacement cost.

“The economic result was a textbook negative supply shock. Manufacturers, unable to cover marginal costs, halted production lines. The scarcity index for basic goods skyrocketed to over 80%. To manage the fallout, the government militarised food distribution (CLAP), shifting from a market economy to a clientelist rationing system prone to massive corruption,” Etasi said.

Simultaneously, the Central Bank of Venezuela (BCV) was stripped of its autonomy, with Maduro government turning the entity as a printing press for the Ministry of Finance. This triggered hyperinflation (technically defined as monthly inflation exceeding 50%) in November 2016. By 2018, annual inflation hit an astronomical 130,060%, though IMF estimates were higher.

To mask the collapse of the currency’s value, Venezuela engaged in serial redenomination. In 2008, three zeros got removed. In 2018 and 2021, the number stood at five and six, respectively. In total, 14 zeros were removed from the currency in 13 years.

Post the 2002–03 PDVSA strikes, the executive branch of the oil company fired over 18,000 technocrats (geologists, reservoir engineers, and managers) stripping the company of its institutional memory. They were replaced by political loyalists.

“In the capital-intensive oil industry, failure to invest in depreciation and amortization (D&A) is fatal. PDVSA stopped injecting water and gas into aging wells to maintain pressure. Result: production freefall from three million barrels per day (bpd) to a nadir of under 700,000 bpd by 2020. The collapse was sealed by the physical failure of the power grid. The March 2019 nationwide blackout, caused by brush fires and neglected transmission lines at the Guri dam, paralysed the country for days. Without electricity to power the upgraders in the Orinoco Belt, the heavy crude turned into sludge in the pipes, causing permanent damage to the infrastructure. This event alone cost the economy an estimated $2.9 billion in GDP,” Etasi remarked.

By 2019, price controls were abandoned, and the US dollar was allowed to circulate freely (de facto dollarisation). While the move stopped the hyperinflationary bleeding, it bifurcated the nation into two distinct economies.

The dollar economy (20%) was a segment fuelled by remittances, illicit gold exports to Turkey/UAE, and government contracting. On the other hand, emerged the bolivar economy (80%): Public sector workers and pensioners earning in local currency, whose purchasing power was obliterated.

By late 2025, oil production crawled back toward 900,000 bpd, aided by specific licences for United States’ Chevron and swap deals with India’s Reliance Industries involving naphtha for crude. However, with a credit-starved banking sector (due to 73% reserve requirements) and decimated public utilities, sustainable growth remained mathematically impossible.

The Gini coefficient, on the other hand, rose from 40.7 in 2014 to 53.9 in 2024, making Venezuela the most unequal country in the Americas. In 2025, Venezuelan inflation soared to 475% in 2025, the highest in the world.

On 2019, Washington imposed full blocking sanctions on the government of Venezuela, freezing all its assets in the United States, and cutting off state-owned oil company PDVSA from the American financial system.

Facing the heat, Maduro did implement a series of economic measures in 2021 that eventually ended Venezuela’s hyperinflation cycle. He paired the economic changes with concessions to the US-backed political opposition, including negotiations for what many had hoped would be a free and democratic presidential election in 2024.

However, in April 2024, the then Joe Biden government allowed the primary oil and gas waivers to expire, citing a failure by the Maduro government to uphold the democratic commitments made in the 2023 Barbados Agreement.

Delcy Rodriguez: Administrator facing a daunting task

Delcy Eloina Rodriguez Gomez, daughter of the Venezuelan guerilla leader and politician Jorge Antonio Rodriguez, wears multiple hats: lawyer, diplomat, and politician. The third is the one she is wearing now. Her promotion from vice-president to President came in January 2026, immediately after Maduro’s arrest.
She has inherited an economically fragile country that needs more than miracle to become ‘great’ again (going by Trump’s immediate reaction on her appointment). The American sanctions on the Venezuelan Central Bank (BCV) have been lifted, and Luis Perez-Gonzalez, deputy of former BCV President Laura Guerra, has been handling the institution’s leadership role since April this year.

It was the same BCV that remained a mere spectator when multiple zeros got stripped from the bolivar after one of the longest hyperinflationary episodes in modern history. Also, the central bank, during Maduro’s time, became notorious for not publishing key economic data. And when it started publishing stats, they were incomplete, forcing IFM and World Bank to stop cooperation with Venezuela in 2019.

The task of converting BCV from a mere spectator of government-sponsored economic miscalculations to the lead actor of Venezuela’s transformation will be a painful task. In the near term, the effects of sanctions relief will likely be most visible in exchange rate auctions, with greater transparency and reliability in these operations potentially helping reduce the gap between the official and the black market rates.

This would directly affect people’s daily life, by reducing price distortions, and helping stabilise inflation expectations. It would also reopen the door to multilateral institutions and international markets, particularly renewed engagement with the IMF, a necessary step toward debt restructuring and access to credit.

However, BCV 2.0 should be independent from political pressures, apart from possessing the ability to communicate a coherent monetary policy. This will satisfy Venezuela’s economic discourse, apart from attracting investment. BCV should be the first ‘government institution’ in the post-Maduro era, that should be capable enough to challenge the administration’s economic narratives.

Despite having abundant natural resource, the state-sponsored mistakes of blocking manufacturing development and industrial diversification have resulted in long-term stagnation and inequality.

Wages in the Venezuelan labour market, based on a mix of public sector, state-owned companies, private activities and a very extensive informal economy, are insufficient to cover basic needs. Being a formal employee no longer guarantees an acceptable standard of living, pushing many public servants to take on side jobs, or turn to the parallel economy.

580,000: the exact number of active businesses, that have been destroyed in Venezuela since early 2000s. The tally of 830,000 from the beginning of the 21st century now stands at less than 250,000 today.

With real GDP collapsing by more than 75%, along with hyperinflation, the country has shifted into a de facto dollarisation, where the sovereign bolivar (VES) coexists with the US dollar, which has become the standard for salaries and prices.

More than 7.5 million Venezuelans have left the country since 2015, about 22.5% of the population. Between 2012 and 2017, 22,000 doctors emigrated, as did more than 167,000 teachers. This exodus has created skill shortages in many sectors, while further weakening education, healthcare, and administration.
Reforms: Key weapon for Rodriguez administration

Rodriguez has brought new laws and regulations reversing Chávez’s nationalisation drive, by reopening key sectors, like hydrocarbons and mining, to private investment.

She has formed a ‘Commission for the Evaluation of Public Assets’, that will audit state ownership in other economic areas, such as agriculture, manufacturing and infrastructure.

Another commission has been formed, consisting representatives from the state, business sector, active workers, and pensioners to ‘review labour conditions, address precariousness, and strengthen the social security system’.

An increase in the so-called ‘integral minimum income’ to the equivalent of $240 per month has been implemented for public sector workers. The amounts are set in US dollars but paid in bolivares at the day’s official exchange rate set by the central bank.

The latest adjustment involved an increase of the ‘economic war bonus’ from $150 to $200 a month, alongside a $40 monthly food bonus. The economic war bonus for pensioners has been raised from $58 to $70 a month, and for public sector retirees from $130 to $168.

There will be a new, one-time ‘professional and academic recognition’ bonus, ranging between $60 and $120, aimed at strategic sectors, such as security, education, and healthcare. Labour inspectorates have been told to address workers’ demands regarding employment conditions.

Venezuela’s National Economic Council has been tasked with designing a more ‘efficient’ tax model aimed at making the Latin American country ‘more competitive’.

The Law on Streamlining and Optimization of Administrative Procedures have been enacted, with the goal of modernising public administration by reducing bureaucracy and incorporating digital tools. The law grants the executive authority to eliminate procedures, shorten timelines, and improve coordination between institutions.

Another mixed commission will evaluate which state-owned assets have ‘strategic’ importance, potentially opening some to private investment. However, the hydrocarbons sector will remain under state control.

The energy sector reform

The partial reform to the ‘Organic Hydrocarbons Law’ has now brought more flexible taxation, apart from lowering royalty baseline rates, and repealing previous restrictive levies to incentivise investment.

On the other hand, the electricity sector has been thrown open to private investment, allowing the creation of joint ventures. The sector, under Maduro administration, earned the infamy of lacking both investment and maintenance. Large parts of the country used to endure hours-long electricity outages, affecting water and telecommunications services.

GE Vernova Venezuela recently signed a Memorandum of Understanding (MoU) with the Venezuelan government to add at least 1 GW of electrical capacity to the National Electric System (SEN) within 24 months. The broader objective contemplates recovering more than 5 GW of capacity over the next four years.

As per the Financial Times, Wall Street banks and funds have now set their eyes on Venezuelan oil assets after Trump’s $100 billion investment pitch (that came in January) and recent legal reforms. Lionheart Capital and Elliott Management are among those pursuing deals, while JPMorgan and Jefferies lead investor trips to Caracas. ExxonMobil and ConocoPhillips, however, are in the ‘wait and watch’ mode, citing unresolved governance, contract, and debt issues.

US Treasury issued sanctions waivers allowing select Western firms to operate, and contract disputes can now be settled in the United Kingdom, France, or Singapore under American law. Venezuelan authorities have already revised proposals under investor pressure, removing clauses allowing government termination for ‘public interest’.

By May, Venezuelan oil production moved past one million barrels per day (bpd) for the first time in over seven years. The feat, confirmed by an OPEC monthly report (apart from measured by secondary sources), was made possible due to a massive 46,000 bpd production increase compared to the March-April period.
It has been a good comeback from the abyss of 2019, when the imposition of American sanctions and export embargo on the Venezuelan energy sector resulted in crude production plummeting under one million bpd, hitting a low of around 350,000 bpd in 2020.

The final take: Nurturing democracy

Rodríguez is not out of the woods yet. Democratic transition is another front, where the acting President will be facing tremendous heat in the coming days.

The return of opposition leader Maria Corina Machado, who the Maduro government barred from competing in the July 2024 election, is imminent. However, things have got complicated, with the comeback of Dinorah Figuera, an exiled lawmaker and elected president of the parallel opposition National Assembly that emerged after the 2015 parliamentary election, after eight years. As per the reports, she has the backing of both Trump and Rodriguez.

What kind of political economy will emerge in the Latin American country in the coming days is not clear. However, it is clear that the Latin American country is betting on its natural resources to come out of the decades-long rut.

More than the hydrocarbons, investing in and uplifting the fragile social sector will make the real difference, if the country wants to be a healthy and competitive economy in Latin America in the coming days.

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However, analysts and investors cautioned that despite Sonko’s removal, things are still unpredictable, with political uncertainty now emerging as the new complication for the West African country.

“The removal of PM Sonko creates additional political uncertainty. There is also a chance that a newly appointed PM might be in favour of a deep debt restructuring, increasing the probability of a negative outcome for Senegalese bondholders,” said Thalia Petousis, portfolio manager at Allan Grey, while interacting with Reuters.

Faye has already named Ahmadou Al Aminou Lo, a seasoned economist and former regional central bank official, to replace the populist Sonko. Reacting to the developments, on May 26, Senegal’s foreign currency-denominated government bonds plummeted as much as 5.7 cents on the euro and nearly 4 cents on the dollar. As per Morgan Stanley, investors are now pricing higher odds of a debt restructuring following the latest events.

However, Petousis said that only foreign-currency debt would get restructured, not the ones backed by the ⁠local currency.

“The risks are that realised haircuts could be steeper than what is currently priced,” the analyst stated further.

Senegalese dollar-denominated bonds have handed investors losses of 9.7% since March 2026, compared to the 0.1% average return of peers in the JPM EMBI Global Diversified Africa index. Bonds due May 2033, on the other hand, traded around 50.6 cents on the dollar, at record lows.

Talking about the Senegal-IMF negotiations, the West African country has been engaged in off-and-on talks to secure a new deal from the global monetary body since the latter froze a USD 1.8 billion programme in 2024 upon the discovery of previously unreported debt that pushed the nation’s debt-to-GDP ratio above 130%.

Senegal right now is locked out of international capital markets and ‌battling a ballooning fuel subsidy bill. Investors are getting anxious about the government’s ability to service its debt obligations.

President Faye’s office said earlier in May that he was personally taking charge of Senegal’s debt file. Cheikh Diba, who had served as finance minister until last week, said that talks with the IMF would resume in the week of June 8, with a deal on the “broad contours ‌of a new programme” possible by the end of June 2026.

However, Sonko, in one of his last acts as the prime minister, lashed out at the IMF, telling lawmakers that it had “never developed a country” and Senegal should rely more on domestic resources than foreign lenders.

Sonko has also been a critic of the government giving in to the pressure of restructuring its debt. Despite being ousted from the PM’s office, he will likely remain an influential political player, as his party PASTEF still dominates the National Assembly.

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The development comes after an IMF staff team conducted discussions with the Jordanian authorities from 2 to 14 April, while performing the fifth review of the economic reform programme supported by the Extended Fund Facility (EFF), which was approved by the global monetary authorities’ Executive Board on 10 January 2024. The mission also conducted the second review of reform measures under the Resilience and Sustainability Facility (RSF) arrangement approved on 25 June 2025.

“The completion of the EFF review will make approximately USD 140 million available out of a total approved programme value of USD 1.2 billion. Meanwhile, the completion of the RSF review will provide around USD 57 million out of a total of approximately USD 744 million,” the IMF said.

According to the global body, the Jordanian economy has continued to show resilience, supported by the government’s commitment to prudent macroeconomic policies. Real GDP growth reached 2.8% in 2025, with growth momentum strengthening in early 2026.

IMF mission chief Cesar Serra also noted the Jordanian government’s commitment to reducing public debt to 80% of GDP by 2028 through revenue enhancement and spending efficiency.

“Real GDP growth reached 2.8% in 2025, with momentum strengthening in early 2026, supported by the government’s commitment to prudent macroeconomic policies and strong international backing,” the mission chief noted. He highlighted the Central Bank of Jordan’s success in keeping inflation below 2%, attributing this to its consistent focus on monetary stability and the country’s strong foreign exchange reserves.

Noting the robust banking sector (with comfortable levels of liquidity and capital), Serra also underlined the measures the government took to mitigate the economic impact of the Middle East conflict, including rising energy costs and disruption to tourism.

In fact, the Central Bank of Jordan (CBJ) has already launched precautionary measures worth JD760 million to protect the national economy amid the prevalent volatile geopolitics. Areas like tourism, food security and banking liquidity have been targeted. From CBJ’s part, some JD700 million have been put into the money market by reducing the mandatory reserve ratio on current and demand deposits by two percentage points, bringing it to 5% for commercial banks and 4% for Islamic banks.

This step will provide banks with additional lending liquidity estimated at JD300 million. Amid other precautionary steps, CBJ has reduced the balance of certificates of deposit issued since the Iran war’s beginning, apart from injecting an additional JD400 million in lendable liquidity into the market.

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Uganda has been working to settle Umeme Ltd’s exit claims from a 20-year power distribution concession that ends this month by obtaining a USD 190 million loan from a consortium of regional banks.

Although Stanbic Bank Uganda is the primary arranger, there is currently little information available about the other banks involved or the relevant interest rates. The loan request was approved by Parliament recently.

Government insiders claimed that in addition to the more than USD 1 billion required to finance the standard gauge railway project, an additional USD 50 million is needed for the recapitalization of the Uganda Electricity Distribution Company, Umeme’s successor, and this money will be raised from commercial lenders.

According to Uganda’s September 2024 debt sustainability analysis report, commercial banks own 12% (USD 1.73 billion) of the nation’s external debt.

In contrast, multilateral creditors, such as the World Bank and International Monetary Fund, hold the majority (65%, or USD 9.77 billion), with bilateral creditors, including China, holding 23% (USD 3.41 billion).

“We are communicating to investors that in order to carry out specific projects and spending commitments, more commercial borrowing is needed. In the short term, the new commercial loans will increase our debt-to-GDP ratio to 46.8%,” Deputy Secretary to the Treasury Patrick Ocailap said.

By the end of September 2024, USD 760 million in commercial debt facilities had been issued to the government, with Stanbic Bank Uganda holding the largest share. According to the report, a considerable amount of these loans are linked to variable interest rates.

Additionally, a loan of USD 400 million was previously obtained from Standard Chartered Bank to install security surveillance cameras throughout Uganda. In 2021, National Medical Stores received a second USD 2 million loan from the same lender to purchase essential medications.

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There is a noticeable difference between the GCC countries, even though the outlook for regional economic growth is still favourable overall. With 82% and 74% of respondents expressing robust positive sentiment, respectively, Saudi Arabia and the UAE are reported to have strong confidence.

As a result of their cautious outlooks for the future of the regional and global economies, Oman (53%) and Kuwait (54%) are taking a more cautious approach. The main causes of the divergence within the GCC are the disparities in national strategies and the evaluations made by international rating agencies.

Saudi Arabia and the UAE profit from upbeat growth projections from international organisations like the International Monetary Fund, which demonstrate the potency of their economic diversification plans.

According to the survey, which is based on the opinions of 500 senior leaders in the GCC’s public and private sectors, geopolitical instability is still a major worry. Merely 26% of decision-makers stated that their companies are ready for a spike in geopolitical unrest.

The UAE stands out among the GCC nations, with 54% of respondents indicating a high level of readiness, despite the majority of the countries admitting to being ill-prepared for geopolitical instability.

Another significant issue is cybersecurity, which is cited by 25% of respondents as the biggest threat to growth.

Though opinions on the effects of national vision programmes differ throughout the Gulf Cooperation Council (GCC), the majority of Saudi Arabia and UAE respondents (over 90%) were extremely pleased with the effects of Vision 2030 and UAE Vision 2031 on their organisations.

According to the Teneo survey, most Gulf decision-makers are optimistic about the region’s long-term prospects and believe it will establish itself as a significant hub for international business within the next 25 years.

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The report states that these figures have been revised lower than those that were released in April of 2023, which indicated growth of 2.7% in 2024 and 4.2% in 2025.

Global Growth

According to the World Economic Outlook (WEO) forecast from April 2024, global growth would reach 3.2% in 2024 and 3.3% in 2025.

However, as cyclical factors fade and activity becomes more in line with its potential, the varied momentum in activity at the beginning of the year has helped to somewhat narrow the output divergence across economies.

The inflation of services prices is impeding the deflation process and making the normalisation of monetary policy more difficult. Because of the growing trade tensions and policy uncertainty, upside risks to inflation have escalated, potentially leading to higher for even longer interest rates.

Careful sequencing of the policy mix is necessary to achieve price stability and replenish depleted buffers to manage these risks and maintain growth.

Predictions On Trade And Inflation

Global trade growth is predicted to resume its alignment with global GDP growth in 2024–2025, having reached a quasi-standstill in 2023.

This year’s first quarter surge is anticipated to abate as manufacturing stays muted. Even though trade barriers have increased and hampered trade between geopolitically separated blocs, the projection calls for a stable global trade-to-GDP ratio.

According to the updated forecast, the rate of disinflation in advanced economies will slow down in 2024 and 2025. This is because it is now anticipated that commodity prices will rise and service price inflation will be more enduring.

Nonetheless, by the end of 2025, headline inflation should return to target due to the labour markets’ gradual cooling and the anticipated drop in energy prices.

Compared to advanced economies, inflation is predicted to stay higher in emerging markets and developing economies and to decline more slowly.

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The director of the IMF mission in Lebanon, Ernesto Ramirez Rigo, stated in a statement that the West Asian country’s continued refugee crisis, border conflicts with Israel, and the fallout from the Gaza war are making the already terrible economic situation worse.

Since the Gaza War began in October 2023, fighting between Israeli forces and Hezbollah in Lebanon has taken place across the West Asian country’s southern border.

In addition to causing harm to southern Lebanon’s infrastructure, agriculture, and trade, the fighting “has internally displaced a substantial number of people.” The severe dangers connected to the conflict, along with a drop in tourism, significantly cloud the economic picture, according to Rigo.

According to Rigo, the central bank and the finance ministry of Lebanon have implemented monetary and fiscal reforms, such as measures to stabilise the Lebanese pound’s fluctuating exchange rate and prevent a currency collapse. These measures have assisted in lowering inflationary pressure.

But he asserted that more work must be done if Lebanon is to see a reduction in its financial difficulties.

“These legislative actions don’t go far enough to facilitate the crises’ eventual recovery. Since the government and parliament have been unable to resolve the financial problem, bank deposits are still blocked and the banking industry is unable to lend money to the economy,” he continued.

“To create the groundwork for economic recovery, it is imperative to address the banks’ losses while safeguarding depositors to the greatest extent feasible and restricting access to limited public resources in a financially sound and trustworthy way,” Rigo added further.

Over 80% of the population now lives below the poverty line, banks have locked most depositors out of their investments, and Lebanon’s currency has lost almost 95% of its value since the country’s economy started to collapse in 2019.

Decades of extravagant spending and corruption by the ruling class, some of whom ran banks that made large loans to the government, caused the crisis to blow up.

Government estimates place the total losses in the financial sector at above USD 70 billion, with the central bank bearing the lion’s share of these losses.

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The World Bank’s Regional Vice President for Eastern and Southern Africa, Victoria Kwakwa, told Reuters in an interview that it may advance by straying from the central bank’s “quasi-fiscal operations.”

The International Monetary Fund stated in January 2024 that the central bank should cut back on its non-core operations, which have included printing money and borrowing to lend to the government. However, she did not specify what those operations were.

With annual inflation at 47.6% and the Zimbabwean currency has lost over 60% of its value vs. the US dollar thus far this year, the nation is still reeling from the memory of hyperinflation under longstanding former leader Robert Mugabe.

“The lack of confidence is the fundamental cause of the issue,” Kwakwa stated.

“And people strive to get rid of it to buy something else every time they get the cash; thus, its value is always declining,” the senior World Bank official continued further.

After ten years of dollarisation, the local currency was reintroduced in 2019, but it quickly lost value, leading the authorities to approve the use of foreign currencies in domestic transactions.

The finance ministry and central bank announced recently about working on ways to stabilise the value of the currency and that they were thinking about tying the exchange rate to the price of gold among other things.

“More confidence will be built through policy predictability and the advances being made in moving away from quasi-fiscal operations,” Kwakwa noted.

According to her, the World Bank is “committed” to the ongoing process that Zimbabwe has been going through since 2022 to pay off billions of dollars in arrears to the organisation and other foreign lenders.

Kwakwa, meanwhile, expressed her “pleasure” at the news that China and India had reached debt restructuring deals with Zambia. The President of Zambia announced the accords in February 2024, raising optimism that Zambia would be on the verge of exiting its more than three-year default.

After settling with the official creditors, the government may now concentrate more on settling with the commercial creditors. And we’re hoping that will happen shortly as well,” she stated.

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The IMF’s consultation report, released on November 21, indicates that Qatar’s economic prospects in the medium term appear positive, with an estimated output growth rate of approximately 1.75% per annum during 2023-2025.

The report further states that the non-hydrocarbon sector is expected to grow at a rate of 2.75%, driven by domestic demand, which will contribute to the country’s medium-term expansion.

The IMF report said, “Qatar’s economic growth has normalised in 2023 following the World Cup-driven boom. Medium-term growth is set to increase to around 5 per cent per annum supported by LNG production expansion.”

According to a recent report, Qatar’s efforts to achieve its National Vision 2030 – which aims to ensure sustainable development by the end of the decade – are expected to yield positive results.

The report also indicates that inflation in Qatar is expected to moderate to 2% this year, while the fiscal and current accounts are projected to remain in surpluses in the medium term.

Moreover, the Planning and Statistics Authority of Qatar revealed that inflation rose 2.52% in October on an annual basis, largely due to increased expenses related to communication, recreation, and food.

However, inflation has since moderated following the tightening of monetary policy in line with the US Federal Reserve, which is consistent with the country’s currency peg to the US dollar.

“Broad fiscal discipline amid sizable hydrocarbon windfalls in 2022–23 has strengthened the fiscal position significantly and is commendable. Continued fiscal prudence is expected under the upcoming 2024 budget,” IMF noted.

The International Monetary Fund has stated that the Qatar Central Bank has effectively maintained both price and financial stability.

Additionally, the banks in Qatar are in good shape, although the non-performing loan ratio has increased due to pandemic-related restructured loans turning non-performing.

“The QCB has refined macroprudential measures to reduce further risks associated with banks’ external asset-liability mismatches, especially those of short maturities, which is welcome,” IMF added.

The agency has emphasised the importance of continued diligence in further strengthening the banking sector, especially in an environment of “higher-for-longer” interest rates.

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“This year (2023), the whole real GDP is predicted to increase by 3.5%,” said a statement released on October 16 after the conclusion of the most recent staff visit.

Ali Al Eyd, Advisor and Mission Chief at the International Monetary Fund, has now predicted that average inflation in the Emirati would remain under control at around 3% in 2023, down from 4.8% in 2022.

The outlook is favourable in the short term, but the fund issued a warning due to increased global risks and unpredictability.

Slower global growth, higher interest rates for a longer period, tighter financial conditions, or geopolitical developments would all weigh on GDP and put a strain on fiscal and external balances, according to the IMF.

The UAE’s 2024 OPEC+ production quota rise is predicted to cause hydrocarbon GDP growth to pick up the following year after the OPEC+ output cuts slow it down in 2023.

The UAE’s haven status, along with social and business-friendly changes, continue to draw foreign labour and capital inflows, supporting growth and driving up real estate prices overall, but especially in high-end segments.

“Due to the high price of oil, fiscal and external surpluses remain strong. In 2023, the fiscal balance is anticipated to be 5% of GDP, driven by oil revenue and robust economic growth,” the IMF prediction stated further.

Over the medium term, increasing non-oil revenue will be supported by the gradual implementation of a corporate income tax, which started in June 2023.

With the benefit of the Dubai Emirate reducing its public debt by 29 billion dirhams through its Public Debt Sustainability Strategy, public debt is expected to continue to shrink and fall solidly below 30% of GDP in 2023.

In 2023 and 2024, the current account surplus is anticipated to be significantly higher than the medium-term average.

Overall, banks are sufficiently capitalized, but risks to financial stability must be continuously and carefully monitored.

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