Zim urged to rally behind monetary policy statement

The Chronicle

Oliver Kazunga, Senior Business Reporter
BUSINESS leaders have called on the generality of the Zimbabweans to embrace the 2019 Reserve Bank of Zimbabwe (RBZ) Monetary Policy Statement in order for the country to achieve the much needed economic turnaround.

In separate interviews, captains of industry said the monetary policy statement announced by the RBZ Governor, Dr John Mangudya, last Thursday was a step in the right direction and needs to be supported by all citizens to ensure successful implementation.

“The monetary policy is good and people should rally behind it to kill the black market. There are people who have money out there (informal market) and that money has to be brought back into the formal system,” Zimbabwe National Chamber of Commerce (ZNCC) Matabeleland region chairman, Mr Godwin Muoni, said.

“It is therefore incumbent upon the monetary authorities to bring back trust and confidence to encourage deposits into the banking sector.”

The monetary policy has enthused many economic players who applauded the Central Bank for heeding private sector suggestions to un-peg the exchange rate system from the previous 1:1 ratio.

“As business, we have to adjust to the policy direction enunciated by the Reserve Bank and if foreign currency is in the bank that would be good for business because companies should not waste time hunting for foreign currency from a number of different sources,” said Mr Muoni.

Confederation of Zimbabwe Industries (CZI) Matabeleland chapter president, Mr Joseph Gunda, said they were pleased that the Reserve Bank had taken on board most of the issues industry had raised prior to presentation of the monetary policy statement.

“The floating of the currency for the market to determine the exchange rate is something we presented before and we are glad that it has taken place now. This will allow those with excess forex to trade with those in need. So, it is a welcome move,” he said.

“We are not sure how the market will take it, but we are urging people to support the measures announced in the monetary policy.”

Although Zimbabwe has experienced acute foreign currency shortages, Mr Gunda hoped that the new policy measures would bring positive transformation.

“The monetary policy pronouncement by the Reserve Bank Governor seems to say allocations will remain on certain commodities like cooking oil, for example. But we still require that allocation committee at the Central Bank to be composed of members from industry. It can’t be just be predominantly Government officials. We need representation of industry from there so that it can benefit industry,” he said.

Mr Gunda, however, said the monetary policy statement did not give a complete and clear picture on certain policy components.

“For example, the repealing of SI 122 where we had thought that some intervention would be required since the repealing has not really brought the expected results. When it was repealed, it was said that those who have got excess forex will use it to import basic goods and reduce the price of commodities but those prices have not gone down and part of the forex that is being used now is being used to import goods that we manufacture locally. So, we want a policy position on that to assist industry,” said Mr Gunda.

Economic analyst, Mr Peter Mhaka, also lauded the monetary policy statement but doubted if prices of goods and services would go down soon.

“We also have so many questions around addressing the issue of prices. It’s not just an issue of saying we wake up saying we are reducing prices. There are cost factors because all the salaries people had were eroded when that two percent Intermediary Tax on Electronic Transactions was introduced in October last year,” he said.

Zimbabwe’s annual inflation, which had been largely trending below five percent for the greater part of 2018, spiked to 21 percent in October 2018 and further to 42,1 percent in December last year.

Dr Mangudya said the price increases last October were due to excessive speculative behaviour, unrelated to economic fundamentals, which also saw unjustified increases in parallel market rates for foreign exchange.

“It is anticipated that these speculative bubbles will collapse in the medium term, as the economy adjusts and self-corrects to policy stimuli,” said Dr Mangudya.

— @okazunga