RBZ to ensure forex auction stability
The Reserve Bank of Zimbabwe (RBZ) will pull all stops to ensure the auction system remains a dependable source of foreign currency in 2022, the Governor Dr John Mangudya said at the CEO Africa Roundtable Business breakfast meeting yesterday.
He said over US$1,7 billion was allotted to key productive sectors of the economy, including capital equipment and raw material imports in 2021.
Some of the forex from the auction went towards procurement of medicines, medical equipment, services, and other consumables. The forex auction system was introduced by the RBZ in June 2020, and has brought economic stability.
The breakfast meeting ran under the theme, “2022 Market focus, gaining the edge through strategic insights”.
It was designed to deliberate on the 2022 market outlook and explore ways to shape the country’s business environment in the new year.
Dr Mangudya said the central bank was dedicated to fine-tuning the weekly auction system to enhance productivity and competitiveness in the economy.
“In the monetary policy outlook, the bank is committed to continuing with foreign exchange auction system as a dependable source of foreign currency, we will refine where refinement is needed, where we need to ensure that the system is improved we will do so,” said Dr Mangudya.
The Governor added that measures would be adopted to reduce money supply growth to anchor and streamline inflation with a view to stabilise the economy.
“The bank will continue with the monetary targeting framework to control monetary aggregates. Our inflation expectations have been firmly anchored, thus providing a platform for sustained disinflation.
“Inflation expectations have been anchored leading to decline from a peak of 837, 5 percentin July 2020 to 60, 7 percent in 2021.”
Dr Mangudya said 2021 saw robust economic activity driven by increased production, which benefited from improved foreign exchange availability and reduced imports.
Resultantly, 80 to 85 percent of goods in retail shops are now locally produced, up from 65 percent in the third quarter of last year, as manufacturing capacity jumped.
Dr Mangudya acknowledged that the economy performed considerably well in 2021 despite the adverse effects of Covid-19.
Going forward, the RBZ is optimistic that a good agriculture season, coupled with continued strong co-ordination between monetary and fiscal policies, would undoubtedly bolster the domestic economic environment in 2022.
However, Professor Tony Hawkins expressed reservations about the 2022 economic growth prospects, citing potentially lower commodity prices and erratic rains which may affect agriculture.
The global economy entered 2022 in a weaker position than expected due to the negative impact of the Omicron variant, and is therefore expected to grow at a 4,4 percent rate.-The Herald
