Zim finance minister sets up a team to control monetary policy

ZIMBABWEAN Finance Minister Mthuli Ncube established a monetary policy committee (MPC) in his latest attempt to stabilise an economy in free-fall.

The former economics professor, appointed last year to get the economy out of a two-decade rut, named a nine-member panel consisting of academics, bankers and the governor and two deputy governors of the nation’s central bank.

The committee, first mooted in March, is a step toward setting a benchmark interest rate and introducing inflation targeting as Zimbabwe’s newly introduced currency plunges and consumer prices surge.

Ncube reintroduced the Zimbabwe dollar, which the country had abandoned in 2009, and banned the use of foreign currency in June. The unit, a precursor of which was tied to the US dollar at parity in February, is now trading at 11.99 to the dollar.

While Ncube has suspended the release of annual inflation statistics until February, economists estimate that the rate is between 230 and 570 percent.

The introduction of the MPC will help provide oversight of the central bank, though its mandate remains unclear, said Lloyd Mlotshwa, head of equities at brokerage IH Securities in Harare, the capital.

“Until their terms of reference are clarified, it’s difficult to gauge how effective the monetary policy committee will be,” he said. “For example, if there is a vote on interest rates, does each member have one vote? Is the central bank governor also the chairperson of the MPC?”