Speculation that the Reserve Bank of Zimbabwe (RBZ) is
readying itself to reintroduce the demonitised local currency gained momentum
last week when former Finance minister Tendai Biti tweeted that the government
was about to revive the Zimbabwe dollar.
Denials by the government have failed to calm the market as
Zimbabweans continue to bear the brunt of a currency crisis that worsened
following the introduction of bond notes in 2016.
RBZ governor John Mangudya (JM) yesterday told Standard
senior reporter Xolisani Ncube (XN) that he does not see Zimbabwe introducing
its own currency in the next 12 months because the economic fundamentals were
not yet in place.
Mangudya also spoke about the alleged rift between him and
Finance minister Mthuli Ncube caused by disagreements over currency reforms.
Below are excerpts from the interview.
XN: What is your comment on reports of a fallout between
you and the Finance minister Mthuli Ncube over the monetary policy statement,
resulting in delays in its delivery?
JM: There is no fallout between the minister, Honourable
Professor Ncube, and myself as alleged.
The whole story is all fiction and fake news of the highest
magnitude. The meeting that is alleged to have taken place between officials
from the Reserve Bank of Zimbabwe, including myself, with the minister never
took place, which means everything else that was alleged to have happened at
the non-existent meeting is fiction meant to confuse the market for reasons
better known to the so-called “reliable sources”. I don’t stoop that low.
XN: If that is the case, what has caused the delay in the
presentation of the monetary policy statement which you once indicated was due
early this month?
JM: There is no delay in the presentation of the monetary
policy statement. The last one was done on October 1, 2018.
I am quite aware that the market is waiting for the
statement in view of the need to ensure that the economy remains competitive.
We shall soon advise the public of the date for the
presentation of the statement. The idea that we have delayed is being peddled
by people with an agenda only known to themselves.
XN: How about reports that the delays are being caused by
disagreements over the pending re-introduction of a local currency? Have you
made any plans to re-introduce the Zimbabwe dollar?
JM: No, not at all. I read that from the newspapers and
social media. It is fake news again.
XN: Do you think it is feasible to introduce a local currency
in the next 12 months considering that the state of the economy remains poor?
JM: Economic fundamentals need to be right before
introducing our local currency. We also need social cohesion. People must be
prepared to accept it for it to succeed. So we need those to be in place and we
are working on ensuring that we deal with the fundamentals. We can then start
to talk about the introduction of a local currency.
XN: Considering that your tenure as RBZ governor is about
to come to an end, what would you consider to be your biggest achievements and
failures?
JM: I believe that I did my best by modestly working for
the economy under very difficult exogenous geopolitical conditions and
sanctions on the country.
The sanctions have three layers (which is) Zidera (US’
Zimbabwe Democracy and Recovers Act), Ofac (US’s Office of Foreign Assets
Control) and Agoa (United States’ Africa Growth and Opportunity Act). Access to
foreign finance under these conditions becomes very difficult, more so, for a
dollarised economy like Zimbabwe that depends on access to foreign finance.
XN: Do you ever regret introducing the bond notes in light
of the fact that their introduction worsened foreign currency shortages and did
not solve cash shortages as was anticipated?
JM: No, not at all. The introduction of bond notes did not
worsen foreign currency shortages. That’s a myth and fiction.
Bond notes were introduced to monetise the export incentive
scheme, which greatly assisted the growth in exports over the past three years
by an average of 25% per year.
Cushioning exporters by between 5% and 20% is meant to make
exporters competitive and to increase foreign currency generation.
That policy cannot, therefore, cause shortages of foreign
currency. In fact, the opposite is true.
The country needs to increase production and productivity
across all the sectors of the economy in order to increase and conserve foreign
currency.
XN: During your time as governor, the RBZ has signed deals
with Afreximbank worth hundreds of millions of dollars. Why are the terms of
these deals kept a secret if they are transparent and meant to help Zimbabwe?
JM: All the facilities granted to Zimbabwe by the African
Export-Import Bank (Afreximbank) were done transparently in line with the
Reserve Bank of Zimbabwe Act.
The facilities have greatly benefited Zimbabwe at the hour
of need.
XN: If you are given a fresh term as RBZ governor, what
would you do differently?
JM: The role of the governor of RBZ as enshrined in the RBZ
Act is to safeguard price and financial sector stability, I would do that as
required by the law and I am doing it.
XN: Has the recent fuel price increase eased the pressure
on the RBZ in terms of sourcing for foreign currency?
JM: The increase in the price of fuel indeed eased pressure
on foreign exchange demand and on arbitrage opportunities.
We had a lot of exploiting of the price to the detriment of
the economy. The price of fuel was undervalued compared to its value
across the region and this caused the pressure on us.
XN: For how long will the RBZ maintain the 1:1 rate between
the US dollar and the bond notes given the fact that the market has rejected
this notion?
JM: The purpose of the export incentive scheme was to
provide a premium to exporters so that they continue to increase foreign
currency earnings required to maintain the 1:1 parity and I think we are doing
that.
As I said, I believe the export incentive has helped us
increase our foreign currency earnings and maintain the 1:1 parity. Daily News
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