Published by the government of Zimbabwe
13 November 2009
editorial
Harare — THE Reserve Bank of Zimbabwe Amendment Bill, which went through its second reading in Parliament this week, should emerge as an instrument that will bring efficiency and effectiveness in the discharge of duties by the central bank governor and the minister of finance without necessarily targeting current personalities.
A prerequisite in any economy is complementarity of the fiscal and monetary policies, a situation that creates the right foundation for economic growth.
The two policies set the direction for the economy, hence the need for harmony than discord.
The relationship between the office bearers, in this instance the central bank governor and the Minister of Finance should be professional to enable them to work together for the good of the country. They need not be friends but professionals whose common objective is to develop the economy.
It is in this regard that we sincerely hope that the Amendment Bill was not motivated by personality clashes that have become apparent between RBZ Governor Dr Gideon Gono and Minister of Finance Tendai Biti.
The entire country cannot be held to ransom because of personal wars that may in the end prove retrogressive. Parliament can also not be used to settle scores but to advance regulations that benefit the country.
Therefore, the issue of the discord that seems to exist between the two gentlemen should be handled in a more sober manner.
The central bank and the Ministry of Finance are institutions that will continue to exist after the current incumbents are long gone and as such, no laws should be passed to leave one institution at the mercy of the other.
At the end of the day, the Minister of Finance need not be central bank governor and vice versa. There should be a distinct separation of powers without necessarily disregarding the complementarity that should exist between the two.
To function effectively, the central bank should remain autonomous, with little interference in its day-to-day running.
It need not be a unit under the Ministry of Finance as some of the proposed amendments seem to suggest but it should be guided by certain limits.
On Tuesday Minister Biti acknowledged the RBZ Amendment Bill, if it sails through in its current form, would leave him too powerful and we hope he was sincere and that something would be done about this.
For instance, under the proposed amendments the Minister of Finance intends to be involved in the lending activities of the central bank while it proposes that the ministry's permanent secretary should chair the audit committee and yet international best practice holds that the central bank, its board and the audit committee should not be under Government control but should report directly to Parliament.
Although the appointment of the permanent secretary as an observer in the RBZ board could be intended to ensure complementarity, the Bill's silence on the composition of the board could leave loopholes that may be manipulated by the minister.
We, therefore, advocate board members to come from such institutions as the Bankers' Association of Zimbabwe, the Confederation of Zimbabwe Industries, the Institute of Directors and such bodies to ensure the appointment of independent and suitably qualified personnel.
Corporate governance practices would determine that the minister does not interfere in board matters but that it is the board that should advise the Minister of Finance and not vice versa.
Of course, we applaud moves to foster increased accountability and transparency by the central bank and the need for it to concentrate more on its core functions of setting interest rates, defending the local currency and regulating financial institutions.
It would be critical to ensure the RBZ does not necessarily deviate from its core mandate, all things being equal.
Other proposed amendments such as the transfer of the central bank's assets to Government and the reversal of such programmes as farm mechanisation need looking into before the Amendment Bill is passed because these provisions could prove more lethal to the central bank itself and the economy in general.
We urge parliamentarians and other stakeholders involved in the current process to ensure that the RBZ Amendment Bill does not produce a malfunctioning monetary and fiscal framework to the detriment of the economy.
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