The report revealed how the government distorted the exchange rate market and the central bank lacked clarity when the pressures were increasing. According to a major condition, the average premium between the interbank and open market exchange rates would not be more than 1.25% during any consecutive five business days. “These interventions have undermined public trust in the exchange rate system and, going forward, it will be necessary to ensure that the exchange rate will be market-determined, allowed to act as a shock absorber, and free from formal or informal guidance or restrictions,” it added. The IMF “staff emphasised that a functioning and flexible exchange rate market should be the means to address BOP pressures, rather than administrative and exchange measures”. “Gross financing needs are very large, mostly due to large debt service payments, while external market financing has dried up.
