By Leopold Munhende
RESERVE Bank of Zimbabwe (RBZ) governor, John Mangudya remains tight-lipped on cash withdrawal limits by individual depositors in a Monetary policy statement in which he reported declining inflation and a stable interbank rate.
Mangudya also declared victory on government’s controversial de-dollarisation exercise he said has been successfully implemented.
Zimbabwean depositors are restricted to a maximum $300 withdrawal limits per week despite continued increases in prices of goods and services.
“Following the gazetting of Statutory Instrument 33 and 142 of 2019 that provided the de-dollarisation framework for the country to trade exclusively in local currency, the bank is encouraged by the positive de-dollarisation process that has been taking place in the country,” he said in a statement that focused on the exchange rate, inflation and price stabilisation.
“The bank believes that the macroeconomic signals that include fiscal and monetary discipline, prospects of positive economic growth and lower inflation are improving to support a gradual de-dollarisation process within a timeframe of five years.
“The use of the local currency for transacting purposes has also continued to go up, reaching a total amount of $459.6 billion from $189 million transactions for the full year 2019,” said Mangudya.
“These measurements of the proportion of the use of the local currency in the economy show that the country is on a right trajectory to de-dollarisation.”
Finance Minister Mthuli Ncube last year scrapped the multi-currency system that had stabilised Zimbabwe’s economy since 2009 after a decade of hyperinflation and uncontrollable exchange rates.
The Bond Note, introduced at 1:1 with the US dollar in 2016, was then re-introduced as the country’s official currency in June last year at a rate of 1:14.
It has since lost significant value and now trades at 1:28 on the powerful parallel market.
The US dollar however is still in use despite government making it illegal.
Prices have also drastically risen over the past year with a 10kg bag of maize meal now going for between $120 and $180 from just $US6 in the multi-currency era.
Mangudya accused locals for driving inflation upwards by speculating and making decisions based on perceived future value of the local currency or government policy.
He added: “We have noticed that most of the inflation in this country is caused by non-monetary factors, which is expectations.
“People are always having high expectations in terms of their money that is ‘I keep my money it will lose value’, it has nothing to do with money supply.
“That once beaten twice scenario, that I once lost money in 2008 not again, these are the things that shape inflation in Zimbabwe.”
The RBZ and Finance Ministry have struggled to rein in inflation that stands at over 300%, according to top economist Steve Hanke despite continued statements by the central bank placing it around 5%.