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Reserve Bank of Zimbabwe back to quasi fiscal activities

31 May 2017 at 18:01hrs | Views
The announcement by Patrick Chinamasa that the Reserve Bank of Zimbabwe is taking over mining activities in Marange is one of the many signs that the Reserve Bank is back to its shenanigans of the past.

The RBZ during that period ran quasi fiscal activities, literally moving government functions from the Ministry of Finance to the Central Bank.   

Serious ramifications of the move were observed the biggest being the debt accumulated by the Central Bank which was later adopted by government through the RBZ Debt Adoption Act of 2015.

What we find shocking is the fact that ZANUPF has failed to learn from its previous mistakes. In fact Ministers whose functions are being usurped have accepted to be subordinate to the Central Bank.

The government must do its fiscal work through the Ministry of Finance; the Ministry must be vested with the sole responsibility of funding projects approved by government through Cabinet.

Recent developments have seen the RBZ usurping powers vested in other Ministries by initiating and funding projects which fall under several existing Ministries.

RBZ has advertised a call for proposals to take up a loan facility project for Higher and Tertiary education, this falls outside the Central Bank's responsibility.

The RBZ through the Deputy Governor of the Reserve Bank announced at a Women's Day celebrations function that the Central Bank will unveil US$76 million dollars to fund women's projects.

In another instance the RBZ also assumed the responsibility as guarantor of the relationship between ZESA and ESCOM which is also an activity outside ZESA's jurisdiction.

While there is a possibility of the temptation to celebrate the short term outcomes, ignoring the prescribed mandate of the RBZ will only result in catastrophic results, historical events already substantiate our claim.

The RBZ must stick to the functions outlined in section 6 of the RBZ Act which include regulating Zimbabwe's monetary system, to foster the liquidity, solvency, stability and proper functioning of Zimbabwe's financial system, to supervise banking institutions, to formulate and execute the monetary policy of Zimbabwe; provide banking services and advise to the fiscal agent of the State.


All the activities highlighted in this statement and others fall out of the functions prescribed in the RBZ Act to make it worse the Central Bank has failed to deliver on the already existing functions. For instance on the obligation to foster liquidity, the RBZ is at the centre of the grand theft of deposits kept at the Central Bank in form of RTGS balances.


Bank queues are getting longer by the day, the poor stop gap measures that the RBZ prescribed have failed these include the introduction of the Bond Note which has only served to send unnecessary distortions into the economy.


The RBZ's failures to deal with functions which are on the core of its prescribed functions therefore disqualify them for any additional responsibilities they are clamouring for.


Allowing the RBZ to venture into quasi fiscal activities is outrageous and unacceptable it is a hallmark of failure, that madness must stop otherwise catastrophic effects will follow.


Together Another Zimbabwe is Possible

Vince Musewe

PDP Secretary for Economic Affairs

Source - Vince Musewe
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