Zimbabwe - A policy agenda for private sector development
Bradley, P. N. | McNamara, K. [editors]
This report has three purposes: (a) to make a preliminary assessment of the barriers to private sector development in Zimbabwe; (b) to make recommendations on the changes needed to stimulate sustainable private sector development; and (c) to identify areas where the Bank and IFC can play useful roles in stimulating private sector development and equitable economic growth. The central conclusion of the report is that persistent excess demand for foreign exchange has served as the reason for an elaborate network of controls whose effect has been to constrain private sector development. Excess demand for foreign exchange has been the result of two primary factors, large fiscal deficits and exchange rate policies. Fiscal deficits have exacerbated the excess demand for foreign exchange, investment sanctioning, controls on international capital flows, and price controls. Accordingly, the primary objective of policy reform should be to eliminate excess demand for foreign exchange and thereby obviate the need for this network of controls. To achieve this objective will require some combination of fiscal restraint, prudent monetary policy and appropriate exchange rate management. There are other important issues, unrelated to macro-economic management, that also need to be addressed in order to stimulate private sector development. The most important of these issues are related to government monopolies and other parastatals, inadequate infrastructure, and labor regulations.
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