Industry criticises RBZ’s monetary policy for ignoring value loss and low exchange rate

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By Alois Vinga

THE Reserve Bank of Zimbabwe (RBZ) has been criticised for failing to deal with value loss in account balances and fixing an unreasonably low exchange rate in its Monetary Policy Statement (MPS).

 According to a statement from the Confederation of Zimbabwe Industries (CZI) the policy also failed to address issues around people’s pensions after effectively introducing a new currency and pegging an exchange rate that was below market forces.

The industry lobby body in the statement released Wednesday argues that critical issues which will address a smooth transition to the new era of a devalued local currency still need to be addressed.

“We urge swift resolution for the preservation of value issues such as legacy debt, RTGS balances, and pension fund values, among others, to allow for a smooth transition. Well researched bold actions are required to deal with distortions,” reads the statement in part.

CZI said that there is need for grounded research to be conducted in coming up with solutions determining how lost value will be compensated.

The industrialists revealed that the manner in which the MPS ignored the important issues had seriously undermined confidence among business players which is likely to derail government’s vision 2030.

CZI called for the immediate creation of an environment which yield independence of key government institutions.

“We recommend strengthening our national institutional arrangements such as statutory independence of the RBZ which should be complemented by strong safeguards that will ensure monetary discipline in line with international best practice,” CZI said.

President Emmerson Mnangagwa is anchoring his development policy on a plan to transform the country into a middle income economy by 2030.

Contacted for comment by Business for finer details on the issues, CZI president, Sifelani Jabangwe said that feedback flowing into his office from members indicate that they are not happy with the manner in which the Interbank Foreign Exchange facility is operating due to the poor rate of 2.5 RTGS dollars against one United States Dollar.

He also expressed concern over the 30 day period given for importers to use their foreign currency failure of which will result in them losing it, arguing that the period needs to be extended to between 90 to 180 days.

The reaction comes at a time when the RBZ Governor John Mangudya, has been grilled a parliamentary committee over similar issues which have been described as “largely inconsistent”.

Tobacco farmers and gold miners have since criticised the central bank over the same issues.