Zimbabwe has reached agreement with the International Monetary Fund (IMF) on a program of economic policies and structural reforms that could pave the way to the crisis-hit country re-engaging with international financial institutions.

Suffering from decades of decline and hyperinflation, Zimbabwe has not been able to borrow from international lenders since 1999, when it started defaulting on its debt.

It has arrears of around $2.2 billion with the World Bank, the African Development Bank and European Investment Bank.

On Thursday, the treasury said the economy grew by 4% in 2018, below an initial forecast of 4.5%, as it struggles with a shortage of dollars and surging inflation.

“Zimbabwe is facing deep macroeconomic imbalances, with large fiscal deficits and significant distortions in foreign exchange and other markets, which severely hamper the functioning of the economy,” Gene Leon, leader of the IMF staff team, said in a statement.

Zimbabwe is also facing the challenge of responding to drought and the devastation from Cyclone Idai, Leon said.

Under the agreement with the IMF, policies will focus on eliminating the government’s double-digit fiscal deficit and adoption of reforms to allow market forces to drive the functioning of foreign exchange and other financial markets.

The new RTGS dollar currency introduced in February has continued to lose value, trading at 3.14 to the dollar on the interbank market and 4.6 on the black market.

Leon said the agreed policies can be expected to remove distortions that have held back private sector growth, but gave no specific targets for cutting the deficit or other objectives.