Management of multi-currency regime hamstrung by weak macro-economic policies

partners. The carnival which was meant to be held in October was postponed to December.

“We do not have dates for the carnival as yet because the companies that we usually work with also have their own programmes in December and thus we have to find a convenient date for everyone,” said Mr Chagonda. despite clearing the IMF arrears recently, with an unsustainable external debt estimated at $7 billion to date. On 29 October 2014, Government had approved a debt resolution strategy, with the main objective of expediting the re-engagement process with the country’s creditors. The Government planned highlevel international debt resolution forum in 2015 with the assistance of the African Development Bank was successful and culminated in a debt arrears clearing plan. This is the same plan that has seen the Government clearing the debt arrears with the IMF, notwithstanding the fact that there is still an unsustainable debt overhang with respect to the World Bank and the African Development Bank arrears.

Countries that usually participate in the carnival include the United Kingdom, United States of America, Italy, Mozambique, Indonesia, Nigeria, Egypt, Democratic Republic of Congo, Zambia, Namibia, South Africa, India, Malawi, Kenya, Brazil, Malaysia, Botswana and Swaziland. payment system to ensure financial stability. This began with Government’s treasury accounts that were successfully transferred from a commercial bank to the Reserve Bank in July 2014, thus restoring the Reserve Bank’s function as banker to the Government. Cabinet approved the principles for amendments to the Banking Act in June 2014, with the intention of pushing through the amendments to Parliament by the end of March 2015.

The amendments to the Banking Act were meant to improve corporate governance in the banking sector, and build more confidence. There was also need to strengthen the Troubled Bank Resolution Framework, enhance consumer protection, improve regulatory co-ordination and facilitate the licensing and regulation of credit reference bureaus.

According to the 2015 national budget statement, total banking sector deposits increased by 8,3 percent from $4,8 billion as of 31 October 2013 to $5,2 billion by 31 October 2014. Total banking sector loans and advances grew by 6,2 percent to $3,9 billion on 31 October 2014, against $3,6 billion in October 2013. In the face of the high cost of doing business, the debt repayment capacity of borrowers remained under stress. Thus, the level of non-performing loans had to rise from 15,9 percent as of 31 December 2013 to 20,1 percent by 13 September 2014. The banking sector remained generally sound during this period, that is, 2014, with a total of 12 banks recording profits as at 30 June 2014.

However, the RBZ raised alarm and worry about the banks return on assets, which remained very low and was slightly negative in June 2014, while the return on equity improved somewhat. The losses recorded by the few banking institutions were attributed to high levels of non-performing loans, high operating expenses and high loan loss provisions.

In conclusion, the year 2016 hasn’t been good at all, with the liquidity crisis worsening by day. This casts a lot of doubt on the effectiveness of our macroeconomic policies. The argument is, we have not instituted strong enough macro-economic policies that go or are in line with management of the multicurrency regime. This fundamental was missed right from the time we decided to adopt the multicurrency regime in 2009. There is a need to continue implementation of structural reforms to improve the business environment, achieve a sustainable current account balance, reform public enterprises and make growth more inclusive.

Dr Bongani Ngwenya is a Bulawayo-based Economist and Senior Lecturer at Solusi University’s Post Graduate School of Business. Feedback: ngwenyab@solusi.ac.zw/nbongani@gmail.com