Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya is soon expected to present his Monetary Policy Statement (MPS) with observers and stakeholder anticipating policy pronouncements aimed at dealing with the country’s monetary problems.
The country abandoned its own currency in 2009, adopting the use of foreign cash.
The government later issued what has turned out to be a surrogate currency – the ‘bond notes’ in 2016 to ease the continuing cash shortages.
Despite pressure from a number of quarters, the government last year maintained that the ‘bond note’ and electronic dollars would remain officially pegged at 1:1 to the U.S. dollar as the government sought to protect people’s savings.
But the official rate has proved unviable resulting in the proliferation of illegal forex trading.
Monetary policy basically refers to the process of drafting, announcing and implementing the plan of actions taken by the central bank.
And activities which are integral to monetary policy consists of management of money supply and interest rates which are aimed at achieving macroeconomic objectives like controlling inflation, consumption, growth and liquidity.
These are achieved by adjustments to interest rate, buying or selling government bonds, regulating foreign exchange rates, and changing the amount of money banks are required to maintain as reserves.
It is however to be seen the extent to which the upcoming MPS will address Zimbabwe’s monetary and currency challenges in view of the country’s utilization of a multiple currency system, largely underpinned by the United States dollar.
Analysts says the main issues that Dr Mangudya will need to address include the ‘currency question’, interest rates and inflation that is seemingly spiraling out of control over the past few months.
The threat of hyperinflation will be of great concern to citizens having experienced the country’s historical height of inflation between 2008 to 2009 when the Zimbabwean government stopped filing official inflation statistics.
Unofficial estimates place Zimbabwe’s peak month of inflation as November 2008 with inflation at 79.6 billion percent.