Opinion / Columnist
Monetary policy laudable and pragmatic
19 Feb 2015 at 09:59hrs | Views
Reserve Bank of Zimbabwe Governor, Dr John Mangudya's Monetary Policy presented recently was quite revealing in so far as it highlighted problems haunting the domestic economy. The policy managed to identify the multiplicity of problems stalking the economy and proffered solutions to resolve them for the good of everybody.
The policy highlighted the prevailing situation in all sectors of the economy, revealing the problems and suggesting solutions taking into cognizance the macroeconomic conditions in the country. The policy is quit alive to the issue of resource limitations of the central bank and challenges facing the economy, but did not run shot of ideas to try to turn around the economy.
The Governor must be praised for trying to tackle the troublesome issue of competitiveness. Researchers have said that statistics show that, due to lack of competitiveness, many businesses have collapsed. The lack of competitiveness of local companies was partly a phenomenon of rounding up of prices at a time industry is also able to produce at least cost.
In an endeavor to enhance competitiveness businesses must round down prices, which have been rounded up after dollarization on account of acute shortage of change for proper pricing systems. The challenge which forced consumers to buy items, not budgeted for, has been resolved by the introduction of small bond coin units.
The policy proposed for an initiative by the Central Bank to mobilise resources meant to help local companies to procure new machinery and equipment. The policy also went some way in bringing finality to the protracted issue of Zimbabwe dollar balances lost in banks when the country switched over to the use of the multi-currency in 2009. The Central Bank has set aside $20 million dollars for demonetization, which will bring finality to the issue of the Zimbabwe dollar balances in a development that should instill confidence in banks.
The move has shown the Government's commitment to the multi-currency, which it will only decide to drop when the economy has built sufficient capacity to be able to sustain own currency. We should be proud that the statement also contains commendable measures to improve liquidity needed in economic recovery in so far as it seeks to tap into the rich source of liquidity, which are the Diaspora remittances.
The government has committed to come up with sources of investment such as in tourism, energy and power, agriculture, mining and manufacturing, where funds from people in the Diaspora would be invested. The policy also need to be commended for its emphasis on the need to resolve few cases of liquidity challenges among banks, the issue of non-performing loans and high cost of finance.
The policy deserves commendation in terms of its attempt to improve liquidity through measures to ensure recovery of overdue export remittances and expansion of the threshold for which firms can receive foreign capital without seeking regulatory permission. It would be valid to conclude by saying that the Reserve Bank Governor is a realist and pragmatic person. Together we will reap the fruits and achieve the goals of Zim-Asset.
The policy highlighted the prevailing situation in all sectors of the economy, revealing the problems and suggesting solutions taking into cognizance the macroeconomic conditions in the country. The policy is quit alive to the issue of resource limitations of the central bank and challenges facing the economy, but did not run shot of ideas to try to turn around the economy.
The Governor must be praised for trying to tackle the troublesome issue of competitiveness. Researchers have said that statistics show that, due to lack of competitiveness, many businesses have collapsed. The lack of competitiveness of local companies was partly a phenomenon of rounding up of prices at a time industry is also able to produce at least cost.
In an endeavor to enhance competitiveness businesses must round down prices, which have been rounded up after dollarization on account of acute shortage of change for proper pricing systems. The challenge which forced consumers to buy items, not budgeted for, has been resolved by the introduction of small bond coin units.
The move has shown the Government's commitment to the multi-currency, which it will only decide to drop when the economy has built sufficient capacity to be able to sustain own currency. We should be proud that the statement also contains commendable measures to improve liquidity needed in economic recovery in so far as it seeks to tap into the rich source of liquidity, which are the Diaspora remittances.
The government has committed to come up with sources of investment such as in tourism, energy and power, agriculture, mining and manufacturing, where funds from people in the Diaspora would be invested. The policy also need to be commended for its emphasis on the need to resolve few cases of liquidity challenges among banks, the issue of non-performing loans and high cost of finance.
The policy deserves commendation in terms of its attempt to improve liquidity through measures to ensure recovery of overdue export remittances and expansion of the threshold for which firms can receive foreign capital without seeking regulatory permission. It would be valid to conclude by saying that the Reserve Bank Governor is a realist and pragmatic person. Together we will reap the fruits and achieve the goals of Zim-Asset.
Source - Stewart Murewa
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