ZiG requires bold measures to succeed
JOHN Mushayavanhu, the new Reserve Bank of Zimbabwe (RBZ) governor, yesterday put his head on the block declaring that “not under my watch” will the apex stray from its core functions as he launched a structured currency seen as the last-ditch bid to the local currency crisis. For the record Mushayavanhu said “not under my watch” 13 times, underlining his resolve to get things right. The veteran banker said he would not “do anyone’s job” referring to the quasi-fiscal operations that have haunted previous central bank governors.
The structured currency, ZiG, will replace the battered Zimbabwe dollar accompanied with the new measures to achieve the twin objectives of price and exchange rate stability and making the local currency as a medium exchange, Mushayavanhu said.
Yesterday’s Monetary Policy Statement came on the back of a sharp depreciation of the local currency which had quickened the redollarisation of the economy, five years after the return of the Zimbabwe dollar.
About eight out of 10 transactions are being done in United States dollar, according to data from statistical agency, ZimStat.
Mushayavanhu’s confidence exuded yesterday is lauded in so far as it is accompanied by predictability, openness and certainty.
The success of the monetary policy measures is predicated on the other factors outside the remit of RBZ. Treasury must continue with its tight fiscal policy regime of cutting the coat according to the size of the cloth. Other housekeeping issues like governance and observance of the rule of law and the fight against corruption have a bearing on confidence which is required to bolster ZiG.
Zimbabwe has had several currencies, and the only missing currency is confidence. It is the absence of confidence that has seen the public doing most of the transactions in United States dollar.
Confidence will be boosted if the central bank is transparent with data such as the value of the new notes printed and the amount of reserves backing it up.
Critics say Mushayavanhu is walking the same path travelled before by his predecessors, noting how the bond note, which was backed by a US$200m kitty from Afreximbank, failed.
ActionAid Zimbabwe gave Mushayavanhu history lessons, reminding him of the risks of “repeating the mistakes of the past”.
“Instead of addressing the root causes of our economic challenges, it [ZiG] offers a temporary fix that fails to inspire confidence among Zimbabweans. We believe that true economic recovery can only be achieved through comprehensive reform that address issues such as corruption, mismanagement, and lack of transparency,” it said, adding that there was need to rebuild trust in the economy and the creation of a conducive environment to investment.
There is no substitute for doing the right things. And the right thing must start from today onwards. The buck stops at 80 Samora Machel Avenue, the home of RBZ.