HARARE - Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has rallied Zimbabweans to “live their vision and mission on empowerment, and beneficiation” if the country’s economic turnaround is to be achieved.
In a recent public lecture emphasising national discipline, the Central Bank boss also moved to dispel the notion that there was no monetary policy since the Harare administration dollarised in February 2009.
In his impassioned plea at the University of Zimbabwe last week, Mangudya said Zimbabweans need to live the vision and ensure that there are “more jobs, high productivity, investment levels, exports and business confidence”.
“I see Zimbabwe as an awakening giant (and our) mission to put in place lucrative measures to grow the economy,” he said.
“This (new thrust) must be anchored in a value system based on transparency, accountability, integrity and patriotism – being love for one’s country and desire to make it better,” Mangudya said.
Even, though, the multi-currency regime had obliterated Zimbabwe’s ability to influence its monetary policy through money printing and all, the former CBZ Holdings Limited chief executive said they were still exercising their duties through a stricter control of banking systems and other policies.
“…dollarisation does not impede or stop a central bank from conducting monetary policy. (it) does not impede… (the management) of banks and putting in place prudential banking, and payment policies regulations,” Mangudya said.
“Because dollarisation has a potential of limiting the scope of monetary policy, (it) calls for a central bank to put in place a tighter monetary policy to counter balance the loss of flexibility,” he said, adding the “discipline required might be worth the loss of flexibility (to print money) in a country’s monetary policy”.
“…a central bank will not be able to create money, but it still remains with the important task of administering banking system regulations, ensuring sound banking practices through the adoption of special prudential measures… credit guidelines, intermarket operations, reserve requirements… to protect the banking public.”
While the current dollarisation has impaired the country’s capability to manage its monetary policy through open market operations, discount loans and change in reserve requirements, the RBZ boss said this did not “impede their ability to provide short-term liquidity support” through such facilities as Aftrades and interbank fund.
“Dollarisation removes the central bank’s ability to fully guarantee the banking system or to fully back bank deposits through lender of last resort function. A function that can be done when the country has sufficient foreign exchange reserves,” Mangudya said.
“Conditions for success under dollarisation needs a back to basics, painful but necessary, national strategy to hold on and push back – pushing back costs such as bank charges, electricity, water and rates for national competitiveness,” he said.
While dollarisation was the “new normal”, Mangudya emphasised the need for “a return to basics, mobilisation of financial resources, integration of Zimbabwe into the global economy” and a moratorium on utility rates for industrial production.
“We must also have a high degree of transparency and accountability in the exploitation of our depletable natural resources,” he added.