Man­gudya to de­liver Mon­e­tary Pol­icy State­ment

Chronicle (Zimbabwe) - - Business - Harare Bureau

RE­SERVE Bank of Zim­babwe Gover­nor Dr John Man­gudya is ex­pected to de­liver a largely de­vel­op­men­tal Mon­e­tary Pol­icy State­ment to­day which will com­ple­ment the Mid-Term Fis­cal Pol­icy re­view.

Dr Man­gudya’s pol­icy comes just af­ter Govern­ment shot down pro­pos­als by the Fi­nance and Eco­nomic De­vel­op­ment min­is­ter to re­duce the civil ser­vice wage bill through a staff ra­tio­nal­i­sa­tion, bonus sus­pen­sion and pay and al­lowances cut.

Eco­nomic an­a­lysts say that to com­ple­ment the Mid-Term Fis­cal re­view, Dr Man­gudya will need to speak to sup­ply side in­ter­ven­tions in or­der to but­tress his fa­mous nar­ra­tive of pro­duc­tion. This will be over and above the 5 per­cent ex­port in­cen­tive scheme in­tro­duced in May to boost ex­ports and en­sure a sus­tain­able flow of for­eign cur­rency.

Given that Cabi­net shot down pro­pos­als by Min­is­ter Chi­na­masa to re­duce the civil ser­vice wage bill, Dr Man­gudya will need to an­nounce how the cen­tral bank will raise fund­ing for Govern­ment to boost and sus­tain its op­er­a­tions. Al­ready, a $150 mil­lion sta­bil­i­sa­tion fa­cil­ity with a re­gional fi­nancier has been ne­go­ti­ated for.

Govern­ment has been op­er­at­ing a bud­get deficit with the po­si­tion ex­pected to widen to $1 bil­lion by year end from $623.2 mil­lion in the six months to June.

To fi­nance the deficit, Govern­ment has turned to the RBZ to is­sue trea­sury bills with around $726,1 mil­lion hav­ing been is­sued by the end of June. The cen­tral bank is yet to of­fi­cially is­sue a state­ment on the amount of TBs that are in the mar­ket but es­ti­mates put the amount around $2 bil­lion.

An­a­lysts ex­pect Dr Man­gudya to give an as­sur­ance that the ris­ing Govern­ment debt will not com­pletely shut out pri­vate sec­tor credit and to ad­dress the in­sta­bil­ity fac­tor of TBs given that most of them are now of a long ten­ure.

The gover­nor is also ex­pected to ad­dress is­sues around the de­lays in ex­ter­nal pay­ments, progress made to sup­port the multi-cur­rency sys­tem par­tic­u­larly the use of the rand, the progress on ar­rears clear­ance, in­ter­est rates, fi­nan­cial in­clu­sion and to give an up­date on the in­tro­duc­tion of bond notes.

Bond notes will be in­tro­duced through a $200 mil­lion ex­port in­cen­tive fa­cil­ity and will go a long way in pre­serv­ing the use of the multi cur­rency sys­tem.

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