Monetary Policy stance to support the 2022 national budget




Persistence Gwanyanya

THE Reserve Bank of Zimbabwe (RBZ) is adopting a tight monetary stance in support of the 2022 national budget as part of efforts to strengthen the Zimbabwean dollar’s appeal as the currency of reference.

The year 2022 will be the second year of the National Development Strategy One which is anchored on currency stability, hence the central bank is prioritising an efficient and effective price discovery mechanism of the foreign currency market.

The objective is for the Reserve Bank of Zimbabwe (RBZ) to eliminate the premium gap between the official and the alternative market by implementing real interest rate regime to avoid speculative borrowing and channel resources for productive purposes.

“2021 has been a learning curve and it is now incumbent upon the RBZ to implement the lessons learnt this year in as far as achieving currency stability is concerned and a tight monetary stance is what is needed for Zimbabwe to achieve its economic objectives,” said Persistence Gwanyanya RBZ Monetary Policy Committee Member.

To curtail reserve money supply growth which is a key determinant of inflation, government through treasury and the RBZ will improve United States Dollar liquidity into the market to neutralise unwarranted pressure on the local currency.

“Going forward there will be increased USD liquidity into the market to attain a favourable equilibrium position with respect to pressure on the access to foreign currency.”

The general consensus among economists is that currency stability is a confidence booster that is key in the collective journey towards an upper-middle-income society by 2030.