Golden Sibanda Senior Business Reporter
FINANCE and Economic Development Minister Professor Mthuli Ncube has appointed a nine-member monetary policy committee (MPC) of the Reserve Bank of Zimbabwe (RBZ), which is chaired by central bank governor Dr John Mangudya.
The appointment of the committee comes at a time Zimbabwe is deep in the process of currency and economic reforms meant to restore key fundamentals in order to stabilise the economy to place it on a firm path to sustainable growth.
This also follows Zimbabwe’s reintroduction of a local currency in June, during which it simultaneously banned a US dollar-dominated multi-currency system, in operation since February 2009; making full monetary policy tools critically important.
Other members of the MPC include the RBZ deputy governors; Dr Kupukile Mlambo and Dr Jesiman Chipika, industrialist and businessman Kumbirai Katsande, ex-Government advisor and economist Professor Ashok Chakravati, former ABC Holdings chief executive Doug Munatsi, economist and former Bulawayo South legislator Eddie Cross, Professor Theresa Moyo and Mrs Marjorie Ngwenya.
The MPC has been established in terms of the Reserve Bank of Zimbabwe (rbz) Act, section 29B, subsection (1), which also requires committee members to have sound knowledge, experience or expertise in finance, banking and fiscal or monetary policies.
In terms of the RBZ Act, the committee shall be independent of the board, chaired by the governor, but comprise deputy governor or deputy governors, as the case may be, deputy chairperson of the RBZ and not less than five or more than seven other persons appointed by the President in consultation with the Minister of Finance.
The MPC’s functions entail determining the monetary policy of Zimbabwe; including the setting of limits on open market operations by the bank and ensure price stability as defined by the Government’s inflation target in the national budget.
It shall also determine interest rates in line with the Government’s economic policies and targets for growth and employment creation as well as other monetary policy functions, as the finance minister may prescribe by way of regulations.
According to the RBZ Act, the committee shall submit its findings to the board of the central bank for information purposes only.
Notably, the MPC’s immediate task will entail stabilising the recently reintroduced local currency exchange rate, which has been on a free fall since being floated in February this year and taming inflation.
Zimbabwe’s annual inflation, which hit 176 percent in June this year, has also been on a wild run since September last year, when the annual rate stood at 5,39 percent.
Prices of goods and services have continued to increase on the back of various economic reforms, among them separation of RTGS and foreign currency accounts, liberalization of fuel procurement, introduction domestic currency and scrapping of multi-currency.
Amid an acute US dollar and liquidity crunch, Zimbabwe is going through a tumultuous economic environment, characterised by high unemployment, a crippling power deficit, low industrial and agricultural production and runaway inflation.
Meanwhile, Minister Ncube has also announced the appointment of an 11member board of the central bank, similarly, chaired by the governor of the RBZ, deputised by industrialist, businessman and former Nestle Zimbabwe country manager Kumbirai Katsande.
Other board members include Ministry of Finance principal director Zvinechimwe Churu, lawyer Edwin Manikai, former Reserve Bank of Zambia governor Caleb Fundanga, industrialist Busisa Moyo, academic Professor Jerry Parwada, Lindiwe Sibanda (President, Country Support-Alliance for a Green Revolution in Africa), POSB chairperson Mrs Matilda Dzumbunu, financial consultant Mrs Emma Fundira and Mrs Belinda Musakwa.