Zimbabwe: Mixed Feelings Over the Monetary Policy

Harare CBD.
2 October 2018

Analyst have expressed mixed feelings on the mid term monetary review which was released by the Reserve Bank of Zimbabwe yesterday.

In an interview with 263Chat,Vincent Musewe an Economist and political commentator has welcomed the direction for banks to create nostro accounts for foreign currency transactions (nostro FCAs), which will run separately from existing bank accounts, now limited to RTGS (real time gross settlement) transactions and bond notes only saying it creates a bit of confidence to the business community.

"On the issue of confidence obviously separating RTGS and FCA has been something that has been legislated since February 2018 but was not done by the banks so the banks quickly have to separate that.

"It creates a bit of confidence because if you have money and you are an exporter you can now safely deposit knowing you can go back and actually get your cash and therefore it could lead to a increased deposit base in the banks with foreign currency.

"The issue of dealing with speculative behavior for example that truckers should pay their money in foreign exchange instead of changing the bond and that foreigners should buy goods in foreign exchange will reduce the speculative rates that we have seen are very important things to me," he said.

Musewe applauded Mangudya for introducing the auctioning system for the Treasury Bills (TBs), adding that there will be a bit of transparency.

"The Minister of finance has promised to come up with a comprehensive policy on what he intends to do in the next three years so as to get things right ,that in it self will now release the governor of the Reserve Bank to implement more meaningful policies and create more liquidity for production so that we can reduce imports and increase exports," he said.

Confederation of Zimbabwe Retailers president Denford Mutashu also said the separation of FCA accounts would attract US dollar deposits in the economy.

However, United Kingdom based Zimbabwean academic Alex Magaisa said the re-introduction Foreign Currency Accounts (FCAs) is just a fancy name for pretend foreign currency.

"We are in a serious debt crisis we borrowed excessively and needlessly in recent years but sorry, there's nothing to show for these borrowings.

"And there's no money to repay the debts but we hope creditors will be sympathetic The USD you deposited in your accounts don't exist anymore. We now call them RTGS FCA. It's just a fancy name for pretend foreign currency

"So we have come back to squeeze some dollars from you - hence the 3900% increase in tax for money transfer. We told you it would be painful," he said.

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