Maravi

(HERALD) Gono reviews policy today

Gono reviews policy today
Business Editor

RESERVE Bank of Zimbabwe Governor Dr Gideon Gono will this afternoon present his delayed Mid-Term Monetary Policy review statement, largely expected to give direction to the country’s economy. Traditionally scheduled for July, the review statement was postponed as the central bank sought to factor in developments which include the supplementary budget presented last month and initiatives by Sadc to boost the country's economy.

Many had begun speculating that Dr Gono had run out of new ideas to salvage the economy and it is in this regard that many will be waiting to hear what he has in store for the nation.

Dr Gono’s office remained tight-lipped over the weekend regarding the presentation.

The economy has — in the past nine months — gone through immense challenges which the monetary policy review statement will need to confront head-on.

Economic commentators have identified foreign currency shortages, the restoration of business viability, exporters’ viability, restoration of supply response in agriculture and the resolution of intermittent water and electricity shortages as key issues that Dr Gono should tackle.

Restoration of trust among stakeholders and improved supplies of basic goods and other items that have disappeared from supermarket shelves are some of the areas highlighted as needing attention.

The question, therefore, is: Will Dr Gono rise to the occasion?

Will his statement give renewed hope to industrialists who are facing viability challenges?

Will he jolt the farming community into producing enough for the local market and more for export?

Will the central bank chief come up with measures to propel the economy forward given the fact that Zimbabwe is practically standing on its own in resolving its economic challenges?

These are some of the questions that confront Dr Gono as he puts finishing touches to his presentation.

Persistent foreign currency shortages, worsened by limited external injections, pose the hardest challenge that the central bank chief will have to deal with.

Manufacturing, mining, tourism, agriculture and other generators of foreign exchange are looking for innovative strategies that will respond to their repeated calls for viability-enhancing measures.

The question of the exchange rate was dealt with by Finance Minister Dr Samuel Mumbengegwi in his Supplementary Budget last month.

Dr Mumbengegwi revised the exchange rate to Z$30 000 to the United States dollar from Z$250.

This leaves Dr Gono with a narrow track on which to jog towards meeting exporters’ calls.

In the face of tightening sanctions which have made it difficult for banks and other companies to secure external lines of credit, Dr Gono will need to summon all his muscles to meet foreign currency demands for seed, fertilizers, chemicals and machinery which farmers urgently require.

Weather experts have predicted a good rainy season, hence farmers will require a timeous and reliable supply of inputs as Zimbabwe seeks to restore its status as bread basket of southern Africa.

Finding the resources to meet these demands could present a major headache to Dr Gono.

Food security remains an area where bold policy positions are required to promote agricultural productivity.

Zimbabwe has in the last few years been allocating scarce foreign currency to the importation of grain, but many feel it is high time the country produced enough to meet demand.

Most supermarkets have not restocked, forcing consumers to go without some items or to turn to the black market.

It was Dr Gono who, during the clampdown, warned of "unintended consequences" of such a move. The nation, thus, waits to see how he will handle this one.

As the festive season draws near, people will need reassurance that food and drink will be available in abundance.

The Monetary Policy Statement will be expected to pierce through the thicket of mixed tempos in the business environment to reassure the business community that efforts will be made to preserve jobs and boost capacity utilisation.

With inflation remaining the country’s number one enemy, its decisive reduction can only come from a revival of the country’s supply side.

However, some have argued that the central bank should do away with the Agricultural Sector Productivity Enhancement Facility (ASPEF) and other interventions to meet money supply targets to help reduce inflation, while others insist it should increase interest rates to levels consistent with inflation.

All these areas are submissions that Dr Gono will need to look at closely to come up with the best strategy under the present circumstances.

The central bank has also been criticised in some quarters for engaging in quasi-fiscal operations that are said to be inflationary, but the deepening delivery shortfalls in respect of water provision, sewerage drainage and treatment, and power supply will leave the governor in a Catch-22 situation.

However, other schools of thought have encouraged the central bank to continue with the quasi-fiscal programmes in defence of people’s decent living conditions.

It will, thus, be interesting to see if Dr Gono will budge to the criticism or if he will choose to ensure provision of such services at whatever cost.

Dialogue between Government, business and labour is critical to finding sustainable solutions for the economy. In this regard, much ground had been covered under the Tripartite Negotiating Forum, resulting in the signing of some protocols a few months ago.

However, this strategy lost steam on the way, an issue Dr Gono may have to deal with in his statement this afternoon.

Both fiscal and monetary policies are always expected to give space to the rural folk who constitute at least 70 percent of the population.

Rural people can undertake viable business enterprises and successful farming ventures, albeit on a small scale. However, they need support in terms of banking facilities, reliable transport systems and viable prices for their produce, among other needs.

They also require inputs and technical advice. Visits to the rural areas have shown that shops at growth points have remained empty due to inadequate supplies, thus affecting their livelihood.

It is against this background that Dr Gono will be expected to give due attention to this sector of the populace.

Women and the youth can also play a critical role in creating wealth and generating jobs, hence they will demand special attention from national policies such as the monetary policy statement, to ensure they realise their potential.

The remaining three months of the year will be telling for an economy that has experienced immense challenges in recent years.

As Dr Gono put it last week, at this juncture the economy no longer has space for problem description but the nation is now more interested in solutions.

Therefore, he is expected to present solutions for the myriad of challenges confronting this economy.

Labels: GIDEON GONO, ZIMBABWE

posted by MrK @ 9:27 AM