Publication:
The Fiscal Costs of Monetary and Exchange Rate Policy Distortions in Zimbabwe

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dc.contributor.authorSteenbergen, Victor
dc.contributor.authorPindiriri, Carren
dc.contributor.authorPsillos, Jimmy
dc.contributor.authorKwaramba, Marko
dc.date.accessioned2025-03-05T16:10:52Z
dc.date.available2025-03-05T16:10:52Z
dc.date.issued2025-03-05
dc.description.abstractThis paper uses a multi-methodological approach to measure the fiscal costs of monetary and exchange rate policy distortions in Zimbabwe. It identifies three channels through which these policy distortions affect tax revenue: the Olivera-Tanzi Effect (inflation-related tax payment lags), an overvalued official exchange rate affecting customs duty on imports, and informalization undermining overall revenue collection. It then measures the fiscal costs of each of these three channels. The paper shows that although inflation tax increases government revenue through seigniorage, its negative impact on tax revenue outweighs its benefit. High inflation and exchange rate distortions have costed Zimbabwe Treasury over three billion US dollars between 2020 and 2023. Policies that remove exchange rate distortions and stabilize prices can substantially improve government revenue and help close the fiscal financing gap.en
dc.identifierhttp://documents.worldbank.org/curated/en/099022425115519510
dc.identifier.doi10.1596/42912
dc.identifier.doihttps://doi.org/10.1596/42912
dc.identifier.urihttps://hdl.handle.net/10986/42912
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.rightsCC BY-NC 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by-nc/3.0/igo
dc.subjectECONOMIC GROWTH
dc.subjectMONETARY POLICY DISTORTIONS
dc.subjectEXCHANGE RATE POLICY DISTORTIONS
dc.subjectOVERVALUED OFFICIAL EXCHANGE RATE
dc.subjectFISCAL CUTS
dc.titleThe Fiscal Costs of Monetary and Exchange Rate Policy Distortions in Zimbabween
dc.typeWorking Paper
dspace.entity.typePublication
okr.date.disclosure2025-03-05
okr.date.doiregistration2025-04-14T12:02:05.988030Z
okr.date.lastmodified2025-03-02T10:06:08Zen
okr.doctypeWorking Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099022425115519510
okr.guid099022425115519510
okr.identifier.docmidP500915-0c058917-5fd7-4a02-93dd-32c0a440aa57
okr.identifier.externaldocumentum34459613
okr.identifier.internaldocumentum34459613
okr.identifier.report197520
okr.import.id6791
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttps://documents.worldbank.org/curated/en/099022425115519510/pdf/P500915-0c058917-5fd7-4a02-93dd-32c0a440aa57.pdfen
okr.region.administrativeAfrica Eastern and Southern (AFE)
okr.region.countryZimbabwe
okr.topicMacroeconomics and Economic Growth::Fiscal & Monetary Policy
okr.topicFinance and Financial Sector Development::Currencies and Exchange Rates
okr.topicMacroeconomics and Economic Growth::Taxation & Subsidies
okr.unitEFI-AFR1-MTI-MacroFiscal-1 (EAEM1)
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