In the 1990s, Zimbabwe was one of the most developed economies in Africa. While many of the country’s underlying strengths remain, some of its industrial and agricultural base has since eroded. The nominally dollarized economy now faces difficulties as diminishing net capital flows and an expansionary fiscal stance have generated an acute cash shortage that has prompted the use of quasi-currency instruments amid imposition of controls over capital and current account transactions. With reengagement with creditors delayed, access to external financing is limited, and the fiscal deficit is being financed by domestic borrowing at an unsustainable pace.
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