THE 2024 Monetary Policy Statement (MPS) has been delayed because authorities are busy fine-tuning exchange rate measures to stop the Zimdollar’s continued depreciation, NewsDay Business has learnt.
The MPS was expected to be released last month, which has raised uncertainties on the market.
Since the beginning of the year, the local currency has depreciated by more than 50% to US$1:ZWL$15 098,03 officially, and US$1:ZWL$20 500 on the parallel market.
The massive depreciation is because of the government’s budget for the year rising by 1 200% to ZWL$60 trillion from last year’s fiscal period.
By so doing, amid low to no growth in the economy, the printing of money to service this expenditure has mostly been inflationary.
“These things take time. They (central bank) will release a Monetary Policy Statement in the fullness of time. They are probably preparing, looking for things to align, that is normal,” Finance minister Mthuli Ncube told NewsDay Business in an interview on the sidelines of the seven-day 56th session of the United Nations Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development in Victoria Falls which ends tomorrow.
“That is normal policy-making. Also, you watch the market, you fine-tune. You want to make sure that there are very few mistakes.”
He said the nation needed to patiently wait for the MPS, as it will announce the details of the currency reforms mentioned by government last month.
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“That is one of the things it will put out there, I cannot go further than that. All I can say is that the Monetary Policy Statement will seek to make sure there is currency stability because currency stability will ensure macroeconomic stability in the sense that prices will start behaving because volatile prices are linked to exchange rate volatility,” Ncube said.
“So, once you deal with currency stability, you deal with stability in general and that is the target, that is the quest and the Monetary Policy Statement will speak to that.
“You don’t want to do something, then there is a mess tomorrow, so all of that is taken into account. It’s a major Monetary Policy Statement.
“It’s not a small Monetary Policy Statement, so it’s good that they (central bank) are taking time, studying things, mulling over things. I think by the time it is released, they will feel that they really applied their minds, that we, as policy-makers, have applied our minds.”
In its latest food security report covering the February to September 2024 period, the Famine Early Warning Systems Network (FewsNet) said the exchange rate volatility would also cause price increases in United States dollar (USD) terms.
“The high and likely continued increase in exchange rates will likely keep ZWL [Zimdollar] prices well above normal, with price rises also likely in USD as the high production and transportation costs are passed on to the consumer,” FewsNet said.
“An increase in the cost of living in ZWL and USD will increase the proportion of households unable to afford basic food needs despite food commodities being generally available on the market.”
