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Sunday, May 26, 2024
HomeNewsZIMCODD Urges Swift Implementation of Monetary Policy

ZIMCODD Urges Swift Implementation of Monetary Policy

RBZ ZiG

Local debt and development advocacy group, the Zimbabwe Coalition on Debt and Development (ZIMCODD) has highlighted the critical connection between politics and economics, stressing the imperative need for political will to support the swift implementation of the 2024 monetary policy measures announced by the Reserve Bank of Zimbabwe (RBZ).

In a statement, ZIMCODD underscored the necessity for comprehensive reforms across sectors to address price and currency instability calling for consistency in policy implementation.

“In theory, economics could be non-political. Yet, in practice, politics and economics have a direct relationship. In short, economics needs political support. As such, there is a need for adequate political will to support the swift implementation of 2024 monetary policy measures together with other critical sector-wide reforms.

“The monetary authority has announced various policy measures to tame price and currency instability in 2024. The fiscal authority is also expected to institute fiscal policies to bolster the monetary policy front. As such, there is a need to fully implement these policies while maintaining consistency in several interrelated ways: internal, vertical, and horizontal consistency,” said ZIMCODD

The coalition also underscored the significance of citizen participation in governance processes, urging the government to involve citizens in decision-making processes that affect them directly.

“The RBZ, in particular, and the government, in general, must reckon that citizen participation (CP) is a crucial element of good governance as it allows citizens to inform, evaluate, monitor, and influence decisions that affect them daily,” said the coalition

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The group further urged the government to address public resource leakages, combat corruption, and reallocate expenditures to critical social sectors.

“The government must curb public resource leakages through corruption, review national projects and programs to identify misplaced priorities, redirect expenditures to social sectors, and reform its long-term infrastructure financing models to reduce pressure on the fiscus. Only through fiscal discipline will the RBZ be able to cut on its quasi-fiscal operations and achieve monetary discipline,” ZIMCODD said

Regarding the RBZ’s announcement on the determination of the ZiG exchange rate by market forces, ZIMCODD noted that while this approach has been advocated since 2019, structural bottlenecks persist.

“The Bank has announced that the ZiG exchange rate will be determined by market forces of demand and supply on the WBWS interbank market, with it only intervening to clear the resultant disequilibrium. But this is not new. The Bank has held this position since 2019. Yet, the local currency price discovery process is still experiencing solid structural bottlenecks. It is the public’s view that a fully floating ZiG exchange rate, when coupled with sound fiscal management, will subdue speculative attacks to help win the war against the black market.

“There is a chance for ZiG to succeed if the RBZ and banks adopt advanced technologies such as distributed ledger technology, which guarantees transparency and efficiency of transactions and is even difficult to disrupt. This ensures that all market transactions are safely recorded, as no documents can be falsified since all data is immutable,” said ZIMCODD

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The group reiterated the importance of restoring market confidence through bold reforms and highlighted the need for social consensus and swift implementation of sector-wide reforms in both public and private sectors.

ZIMCODD stressed that the success of the new currency, ZiG, hinges on the government’s commitment to implementing comprehensive reforms, fostering transparency, and regaining public trust in the central bank.

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