The Sunday Mail
Norman Muchemwa
The Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe is committed to ensure price stability in the economy as well as smooth functioning of the interbank rate.
Major functions of the committee, that was established this past September, entails determining the monetary policy of Zimbabwe; including the setting of limits of an open market operation by the bank and ensure price stability as defined by the Government’s inflation target in the recently announced Budget.
The committee, chaired by the Reserve Bank Governor Dr John Mangudya, held its second meeting on November 15 to deliberate on its mandate to stabilise prices and allow for the smooth functioning of the economy.
Further, the committee welcomed the 2020 National Budget’s thrust to boost productivity and create jobs.
“The committee continued with its mandate to deliberate on a path to ensure exchange rate and price stability, the smooth functioning of the interbank market rate and how to support economic activity without prejudice to the key objective of reducing inflation to low and stable levels in the short to medium-term,” Dr Mangudya said in a statement.
“The committee welcomed the 2020 National Budget whose main thrust is to boost productivity, growth and job creation. The committee thus underscored the importance of aligning monetary policy to the envisaged fiscal policy.”
The committee, Dr Mangudya added, emphasised the need to support exports by removing bureaucracy in the administration of exports.
“The committee discussed the significance of exports to the country’s foreign exchange receipts and agreed on the need to support exporters by removing any bureaucracy that impede the administration of exports. At the same time exporters are expected to comply with the Exchange Control regulatory provisions on the repatriation of export proceeds.
“The committee resolved that all exporters that do not repatriate export proceeds within the statutory Exchange Control approved limits, shall forfeit their retention of export proceeds through the liquidation of such funds upon receipt onto the interbank market at the prevailing exchange rates,” he said.
In its endeavour to improve efficiency of the interbank system, Dr Mangudya said the MPC resolved to set up a working group.
“Concerning the operations of the interbank foreign exchange market, the committee resolved to set up a working group comprising of the Reserve Bank officials, treasuries from authorised dealers and members of the MPC to review the rules of the interbank market, with a view to improving its efficiency.”
“The committee also underscored the need to incorporate bureaux de change in the process in order to expand, deepen and enhance the operational efficiency on the interbank market. In addition, the committee agreed to launch the market tracker under the Reuters system, which is intended to enhance transparency in the operations of the interbank market, by the end of November 2019.”
Dr Mangudya added that the committee noted the need to come up with quarterly monetary aggregate targets, consistent with the macro-economic framework underpinning the 2020 National Budget.
These targets, he said, will be monitored and regularly communicated to the market, as part of the committee’s dis-inflationary programme.
