Monetary Policy Statement to be presented after elections: Mangudya

Bernard Mpofu

HARARE – Reserve Bank of Zimbabwe governor John Mangudya will present his second Monetary Policy Statement (MPS) after the general elections, a statement which is largely expected to address the current currency crisis and rising inflation.

Zimbabwe is facing a severe currency crisis, triggered by a trade imbalance following the introduction of multiple currencies in 2009.  Experts contend that addressing the current macro-economic imbalance requires a sharp rise in foreign exchange reserves and an improvement in the fiscal balance.

The central bank chief last announced his MPS in February which was anchored on enhancing financial stability for business confidence. The statement came at a time when the economy was experiencing renewed hope and confidence after the resignation of former president Robert Mugabe last November.

Mangudya told Business Times this week that the apex bank will present the MPS during the first two weeks of August. “We are currently collating the statistics and we should be able to present the statement within the first two weeks of August,” Mangudya said in a telephone interview.

Zimbabwe is expected to go for elections on July 30.

Government’s stock of treasury bills has been soaring over the last six months amid concerns that this could crowd out private sector lending. The central bank contends that the issuance of treasury bills takes account of the need to strike a balance between the gap between revenue collection and expenditure.

The current cash shortages have dampened confidence in the banking system despite government’s push for electronic transactions and mobile money platforms.

With exports underperforming, critics say close to 90% of the country’s RTGS balances is not backed by nostro accounts balances.

As the tobacco marketing season reaches its tailend, experts say the central bank would require a fresh nostro stabilization fund to ease liquidity constraints as well as facilitate imports.

According to Mangudya the intervention by the central bank in the foreign exchange market through draw-downs from the nostro stabilization facilities amounting to $1,1 billion during 2017 assisted to stabilize the forex market and sustain financing of critical imports such as fuel, electricity, medicines, cash imports and raw materials.

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