RBZ Governor issues a monetary policy statement

by Rudo Saungweme

Reserve Bank of Zimbabwe Governor, John Mangudya has issued a monetary policy statement that addressed the topical issues of price hikes and foreign currency shortages among other things.

The monetary policy statement which is issued in terms of Section 46 of the Reserve Bank of Zimbabwe Act [Chapter 22:15], requires the Governor of the central bank to produce a Statement of Monetary Policy giving an account of the monetary policy measures pursued in the preceding six months and the new measures to be pursued in the subsequent six months` period.

In his statement, Dr Mangudya said, “We are optimistic that the economy will surpass the initial growth projection of 4.5 percent, and register growth of around 5 percent this year. This optimism is underpinned by better-than-anticipated performance across the key sectors of the economy, in particular agriculture, mining, tourism and manufacturing during the first six months of the year.

“In agriculture, tobacco outperformed initial projections to record output of two hundred and fifty million kilograms in 2018.This is the highest tobacco output ever produced in Zimbabwe.”

Some Economists present said that the good performance in all sectors across the country was being attributed by reforms that were put in place by the New Dispensation.

“The package of reforms that have been put in place by Government since November last year provides a strong springboard upon which the economy is showing great signs of sustained recovery.

“Accordingly, this Monetary Policy Statement seeks to cement these reforms, by putting in place measures to strengthen the multi-currency system in order to safeguard financial and price stability which is important for sustainable economic growth envisaged in vision 2030 of becoming a middle income country with a per capita income of three thousand five hundred United States Dollars that equates to a Gross Domestic Product of around sixty five billion United States Dollars.”

 In response to a question from the audience on whether bond notes are to be scrapped, Dr Mangudya said, “The bank shall continue to use Savings Bonds for mopping up excess liquidity from the market. As at 31 August 2018, the Savings Bonds had raised US $1.5 billion”

The Governor said that RBZ would not devalue bond notes indicating that it is economic suicidal which will result in prices going up due to hyperinflation.