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Oliver Kazunga Acting Business Editor
ECONOMIC commentators have urged the government to recapitalise the Reserve Bank of Zimbabwe within the specified time frame in order to guarantee the effectiveness of the 2014 Monetary Policy Statement.Presenting the 2014 national budget last month, Finance and Economic Development Minister Patrick Chinamasa announced that his ministry would ensure RBZ was recapitalised by March 31.
He said between $150 million and $200 million was needed for recapitalisation and efforts were already underway to raise capital.
In separate interviews yesterday, economic commentators said it was imperative for the government to implement the recapitalisation of the RBZ to capacitate it in performing the lender of last resort and inter-bank market functions.
“Over the years, the RBZ has been incapacitated in terms of performing its core function, the lender of last resort as well as playing the inter-bank market role.
“This is because of under-capitalisation of the central bank; it is therefore imperative for the government to ensure that the RBZ is recapitalised so that this year’s monetary policy statement becomes effective,” said an economist, Innocent Masauti.
He said RBZ acting governor Dr Charity Dhliwayo should come up with a monetary policy statement that supports pronouncements made in the 2014 national budget.
“The monetary policy statement must lay down the minister’s (Chinamasa) pronouncements of the national budget. To do this, Dr Dhliwayo should ensure the RBZ has proper structures in place as well as the necessary support infrastructure,” he said.
Masauti added: “The RBZ has kept the date for this year’s monetary policy presentation, but from the information we have gathered the monetary policy will be presented in the next three weeks.”
He said RBZ recapitalisation was also critical to guarantee the country of a vibrant and sound financial sector.
“The recapitalisation of the central bank will go a long way in helping with the inter-bank market as well as restoration of the lender of last resort function; this effectively means that banks will now be able to approach the reserve bank for overnight accommodation. Moreso, if recapitalised, it will accumulate enough reserves and in the long run we are guaranteed of a vibrant and sound financial sector,” said Masauti.
An economic commentator, Wendy Mpofu echoed similar sentiments adding that considering the liquidity challenges in the economy, government was likely not to have recapitalised RBZ within the stipulated time frame.
“Taking into consideration the liquidity constraints the country is facing, it is likely that it will not be possible for the government to have recapitalised the RBZ by March 31.”
Another economic commentator Peter Mhaka said the monetary authorities need to bring back a gold backed currency to guarantee stability in the economy.
He, however, said this was not possible at the moment in light of the economic challenges the country was reeling under.
“We need to bring back a gold backed currency and that can be done at a time when the economy is able to sustain itself. Recapitalisation of the RBZ is a step in the right direction in trying to create enough reserves for the monetary authorities,” said Mhaka.
Minister Chinamasa, in this year’s national budget presentation indicated that as of October 31, 2013, the year-on-year growth in money supply stock stood at 3.61 percent ($3,951 billion) compared to 24.9 percent as at October 31 in 2012.
Despite the slowdown in money supply growth, the annual growth in loans and advances to the private sector increased by 9.3 percent as at October 31, 2013 compared to 29.3 percent as at October 31 the previous year.
To highlight the serious liquidity crunch obtaining in the economy, Minister Chinamasa said a total of $124.3 million was advanced to the private sector as new borrowings during the first 10 months of 2013 compared to $662.3 million during the same period in 2012.
Online Reporter