Breaking News

'Monetary Policy Statement will bring sanity' says RBZ Governor - will not and never will as long as insane rule the roost

by Nomusa Garikai
21 February 2019 | 1172 Views
The primary objective of the Reserve Bank of Zimbabwe's (RBZ) long awaited Monetary Policy Statement was to bring sanity to Zimbabwe's chaotic economic world, especially the madness in financial and currency market. As RBZ Governor, Dr John Mangudya, readily admitted when he launched the policy statement. "This is essential in order to bring sanity in the foreign currency market whilst at the same time promoting exports, diaspora remittances and investments for the good of our national economy," he said.

Sadly, instead of bringing sanity and stability he has only succeeded in mudding the muddy waters. After going through the statement it is clear that no one in RBZ and Ministry of Finance; headed by the flamboyant and blundering Professor Mthuli Ncube, who approved the statement; know what they are doing.

The statement confirms that insanity still rules supreme in Zimbabwe because nothing in the statement makes any sense. Nothing!

"Denominating the existing RTGS balances, bond notes and coins in circulation as RTGS dollars in order to establish an exchange rate between the current monetary balances and foreign currency. The RTGS dollars thus become part of the multi-currency system in Zimbabwe. The legal instrument to give effect to this has been prepared," said the statement.

It should be noted here that RTGS balances were, until now, denominated Bond Notes, the electronic equivalent of Bond Notes and coins. The value of the RTGS was less than the Bond Notes and Coins for various reasons including convenience and electronic transactions were subject to the new 2% tax introduced last October by Minister Ncube. Whilst the exchange rate to Bond Notes and coins was 3:1 to the USD the equivalent RTGS exchange rate was 4:1 or worse.

So in denominating all Bond Notes balances and cash to RTGS$ means  people have just lost out, instead of having Bond Note worth US$0.33 they now have RTGS$ worth US$0.25!  

"The RTGS dollars shall be used by all entities (including government) and individuals in Zimbabwe for the purposes of pricing of goods and services, record debts, accounting and settlement of domestic transactions," we are now told.

When Governor Mangudya was asked what is exchange rate for the RTGS$ against the USD; his reply was that the RBZ will not set a rate but would let the market decide.

It should be remembered here that until this statement government had recognised only the official exchange rate of 1:1 of Bond Note to USD.

So by acknowledging the unofficial exchange rate of 4:1 those with the economic muscle will impose the exchange rate that suits them. Employers, including government, will never adjust the workers' wages, agreed at on the basis of 1:1 exchange rate. Meanwhile all the goods and services will be charging in RTGS$ using the highest exchange rate possible!

Last time, October last year, when Finance Minister suggested government would let the Bond Note float this had caused serious financial turmoil as people rushed to sell their Bond Notes for the more stable USD; the exchange rate soared to as much as 10:1 and only started to come down when the Minister withdraw his foolish statement!

It is hardly six months since Minister Ncube's ill-advised exchange rate comment and yet government has once again put its foot into it! Government has just fired the starting gun of the rat race to buy USD with RTGS$. The value of the latter will fall.

If government tries to impose price control by insisting on a stable RTGS$ price whilst allowing the market to determine the later's value this will only result in shortages. Zimbabweans have been queuing for cash, fuel, bread, etc. the queues are only going to get longer and the list of commodities is short supply will increase.

"The Bank has arranged sufficient lines of credit to enable it to maintain adequate foreign currency to underpin the exchange market. This is essential to restore the purchasing power of RTGS balances through safeguarding price stability emanating from the pass-through effects of exchange rate movements," said Governor Mangudya.

Zimbabwe's chronic shortage of foreign currency is a child of the country's skewed balance of payment. We are importing far more than we can pay for through our export earnings. We need to revive the country production to reduce the volume of imports, we are now net importers of food a far cry from our breadbasket of the region days. Creating lines of credit, dictating what people should spend their hard earned incomes on, etc. are not going to end the country's foreign currency shortages and all the other economic problems.

It is laughable that Dr Mangudya should be admitting to the need to "bring sanity to the foreign currency market" when he knows that it was the RBZ and Ministry of Finance's ill-advised policies that brought the insanity in the first place. By the same token he and Minister Ncube know the recent statement will do nothing to end the chaos and insanity in the Zimbabwe economy.

The two gentlemen know the madness in the Zimbabwe economy will not end until something is done to end the rampant corruption and to restore investor confidence in Zimbabwe as a stable country and not a pariah state ruled by vote rigging thugs. There can be no economic recovery, much less prosperity, whilst the country remains a corrupt and lawless nation. There can never be sanity whilst the insane continue to rule!

Mthuli Ncube RBZ Monetary Policy Statement RTGS$

All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.



Latest News

Rocks from mountain crush huts in Zimbabwe

by City Press | 24 March 2019 | 2305 Views

'Tax reforms to rescue debt-distressed Zimbabwe'

by Staff reporter | 24 March 2019 | 669 Views

Afreximbank grants Zimbabwe interbank forex trade loan

by Staff reporter | 24 March 2019 | 748 Views

Zimbabwe volcano fears - The Civil Protection Department (CPD) in Masv...

by Staff reporter | 24 March 2019 | 2891 Views

Mnangagwa goes Biblical: 'Zimbabwe accepts will of God'

by Staff reporter | 24 March 2019 | 1061 Views

Open letter to President Mnangagwa

by Viniel Deredza | 24 March 2019 | 885 Views

Warriors ease into Afcon finals

by SuperSport | 24 March 2019 | 572 Views

Rights Commission finalising probe into Zimbabwe army crackdown - THE ...

by Staff reporter | 24 March 2019 | 159 Views

3 lawyers banned from practising - THREE lawyers have been banned from...

by Staff reporter | 24 March 2019 | 604 Views

Jabulani Sibanda to bounce back?

by Staff reporter | 24 March 2019 | 933 Views

Questions over Mnangagwa's choice of advisors - ON three occasions, Pr...

by Staff reporter | 24 March 2019 | 247 Views

Potraz board okays tariff increases

by Staff reporter | 24 March 2019 | 218 Views

Horror Cyclone destruction trail unravels - THE human toll of Cyclone ...

by Staff reporter | 24 March 2019 | 140 Views

LIVE: Zimbabwe vs Congo Brazzaville

by Staff reporter | 24 March 2019 | 3502 Views

Zimbabwe debt should be audited - ZIMBABWE should not rush to pay its ...

by John Kachembere | 24 March 2019 | 812 Views

Zimbabwean couple hijacked in Durban, wife missing since Monday - A Zi...

by Staff reporter | 24 March 2019 | 3742 Views

Mnangagwa's days numbered

by Staff repo | 24 March 2019 | 8057 Views

Zimbabwean man dies during sex with SA mistress - A  67- year-old...

by Staff reporter | 24 March 2019 | 3628 Views

Zimbabwean company donates laptops to needy SA varsity students - Zoro...

by African News Agency (ANA) | 24 March 2019 | 1039 Views

Gweru prophet sets up school of spiritual gifts - Gweru-born Prophet G...

by Staff reporter | 24 March 2019 | 489 Views

Potraz brings toll free platforms to rural folk

by Staff reporter | 24 March 2019 | 162 Views

Mnangagwa pledges support for Gukurahundi victims

by Staff reporter | 24 March 2019 | 414 Views

Zimbabwe banks must support the interbank trading - THE interbank mark...

by Andrew Lampard | 24 March 2019 | 262 Views

Robbing the poor in the name of patriotism - The post-Robert Mugabe ad...

by Tawanda Majoni | 24 March 2019 | 223 Views

'Using Air Zimbabwe will pose logistical problems for Mnangagwa' - Dep...

by Staff reporter | 24 March 2019 | 418 Views


Andy Muridzo promises new album

by Simbarashe Sithole | 18 March 2019 | 308 Views

Kwejani band is back! - AFTER an eight-year hiatus, Victoria Falls' su...

by Staff reporter | 13 March 2019 | 1189 Views

Moyo revives Pantsula genre

by Staff reporter | 10 March 2019 | 464 Views

Majaivana's sad farewell

by Bruce Ndlovu | 10 March 2019 | 6757 Views

Nceku shifts base to SA

by Staff reporter | 09 March 2019 | 827 Views

Baba Harare abandoned by band members - Jit musician, Baba Harare has ...

by Staff reporter | 04 March 2019 | 2050 Views

Winky D pays the price

by Staff reporter | 03 March 2019 | 5517 Views

Greatsoftline For All Of Your Software Needs

coupon and promo codes: greatsoftline for all of your software needswhile some online sellers have promotional services that reduce the overall amount you spent, others do not .you need to be on the lookout for the best outlets in order to chase th... Read More
ITnews 25 February 2015 ago

Five Reliable Outlook Pst File Repair Tools

Outlook pst files can become corrupted -- and when that happens, work grinds to a halt. if your organization relies on outlook, one of these tools could save the day. outlook is the industry standard groupware tool. let's take a look at five that can... Read More
ITnews 04 May 2015 ago