By Dr Admire Maparadza Dube
HARARE – The Reserve Bank of Zimbabwe’s (RBZ) role is clear: implementing measures to stabilize the economy. Specifically, mandating a minimum 25% ZWG in all transactions could be a viable solution.
Currently, banks are being asked to increase liquidity reserve ratios to 30% and statutory ratios to 15%. However, they’re hardly lending, and money is tight. The RBZ’s decision to not offer USD overnight accommodation has led banks to be cautious.
In my opinion, considering liberal expenditure and debt accumulation, banks should participate more, not less. They must redirect loose ZWG from infrastructure expenditure to productive sectors to ensure growth and avoid harming the economy.
The efficacy of monetary policy tightening works fully in a monocurrency environment. However, the USD operates independently, minimally affected by local policy.
The RBZ cannot freely float the exchange rate without risking the economy. Its main USD source is the 25% export surrender rate, averaging US$50 million weekly. Floating the rate would increase ZWG needed to buy this export component.
National debt, approximately half of Gross Domestic Product GDP, is a significant concern. Servicing international debt requires 90% of export surrender inflows, according to Zimbabwe Coalition on Debt and Development (ZIMCODD).
My proposal is for the RBZ to introduce a mandatory 25% ZWG minimum for all transactions, with a minimum transaction threshold. This requires leading indicators, as lagging ones are too slow.
If implemented, constant monitoring is necessary. If it fails, I suggest rescinding it. In national administration, adaptability is key.
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