Reserve Bank Monetary Policy Statement highlights

Monetary Policy Statement Review - Breakfast Forum Highlights

ZoomZimbabwe

22 February 2019

Reserve Bank Governor John Mangudya (left) with Finance Minister Mthuli Ncube

The Reserve Bank of Zimbabwe’s Monetary Policy Statement Review was held at a breakfast forum in Harare on 21 February 2019. Here are some of the comments:

"Since we are starting a new concept all import invoices have to be resubmitted to the banks to avoid distortions...the rate will open at $1:2,50 (RTGS) as per agreement with foreign currency dealers in the banks. Demand and supply will determine the rate going forward," - RBZ governor John Mangudya

"We are spending what we have as government, we paid January and February salaries standing on a cash position and want to maintain that," Finance Minister Mthuli Ncube

"All bank balances be it RTGS or Nostro will remain the same. If you had one million in your bank account be it RTGS or Nostro, nothing has changed," - John Mangudya

"The fixed exchange rate of 1:1 was killing us, it was not sustainable and cost us US$2 billion. It was also punishing exporters. We were killing the geese that lays the golden eggs," - Mthuli Ncube

"The bank rate will determine the rate on the market. We will arrange foreign lines of credit since demand will be greater than the supply of foreign currency. We need to cloud seed the market with foreign currency," - John Mangudya.

"Measures put in place by Reserve bank of Zimbabwe governor last week are like a robot at the centre of a busy city centre. He needs to make sure that the robot is working at every material time," - Economist Ashok Chakravarti

"I want to say I am guilty as charged for collecting exporters' money at a fixed exchange rate of 1:1 when prices had risen by three or four times," - John Mangudya

"Increasing production will reduce imports, imagine Zimbabwe is spending half billion on cereals yearly, this puts pressure on the exchange. Surely we can produce these things," - Economist Gift Mugano

"For the foreign currency dealer this is your opportunity to open formal bureau de changes and trade formally. We only have one Zimbabwe and should work together," - John Mangudya

"We delayed presenting the monetary policy because we wanted to analyse all submissions from all sectors of the economy so that we speak to everyone, nothing else," - John Mangudya

"Bulk of money in Zimbabwe is seating on the RTGS platform. We only have $437 million of bond notes," - John Mangudya

"We are making progress with the IMF, they are monitoring us...We are more than walking the talk," - Mthuli Ncube

"RBZ will publish all average exchange rates in the market in all daily newspapers to ensure transparency in the market. Banks will give the RBZ the schedule of all customers who have been allocated forex," - John Mangudya

We created a dead asset from land. We need to sort out the issue of 99 year leases and also sort out issues relating to farmer compensation for improvements. We have done a valuation for nine provinces," - Mthuli Ncube

"Let us securitise land so that farmers will be able to access loans and lines of credit to increase production to boast foreign currency reserves," - Economist John Robertson

"We need a clear policy for import substitution and avoid using forex on useless imports which put pressure on the exchange rate," - Gift Mugano

"Bond notes came into effect to formalise the export incentive. The 5% incentive scheme was a shadow exchange rate. It went on well when inflation was below 5%. When the inflation went beyond 20% in October the 1:1 exchange became unsustainable," - John Mangudya

"The parallel market (street) rate is way too high because there is a risk premium, you can go to jail for 10 years," - John Mangudya

"We will fight inflation through managing the money (supply) already in circulation rather than through Inflation targeting," - Mthuli Ncube

"We have never raided anyone's nostro account our records can testify and will not do so going forward," - John Mangudya

"We will undertake a global deal road show in different countries to explain our economic situation in June/July. We will be in Frankfurt and Tokyo. We expect to sign deals that will benefit the country's economic performance."- Mthuli Ncube

https://zoomzimbabwe.com/2019/02/22/highlights-of-the-monetary-policy-breakfast-meeting/