THE government said yesterday that the country was not printing money unduly and would stick to its targets aimed at stabilising the Zimbabwe dollar, to reduce prices, the Daily News reports.
This comes as the Reserve Bank of Zimbabwe (RBZ) has been accused of printing more money to pay for gold purchases — a move that would threaten the country’s chances of getting assistance from lenders such as the International Monetary Fund (IMF).
It also comes after the IMF painted a grim picture of Zimbabwe’s economic prospects last week.
Yesterday, RBZ governor John Mangudya said accusations that the government was secretly printing money to fund State activities were untrue.
“The Reserve Bank of Zimbabwe would like to highlight that as it reported in its monetary policy statement of 17 February 2020, the growth in money supply — or more specifically reserve money — in 2019 was as a result of subsidies on fuel, electricity, grain and government expenditure.
“The contribution of the gold sector incentive scheme was very minimal to the growth of reserve money and cannot be viewed as ‘secret money printing’.
“There is no secrecy in the payment of the gold incentive scheme by government through the Bank,” Mangudya said in response to an article by the respected Financial Times of London last week.
“In order to ensure the continued flow of gold through the formal channels and thus mitigating against side-marketing of gold, government — through the central bank — provides incentives to the gold sector to increase foreign exchange through the interbank foreign exchange system.
“The gold incentive scheme is being funded through the Budget.
“In our view, the decline of the value of the local currency was largely due to various factors that include low business and consumer confidence, low production levels within the economy and the impact of macro-economic shocks such as the drought and Cyclone Idai.
“The depreciation of the local currency is, therefore, mainly exacerbated by these factors, especially given that there is also a shortage of Zimbabwe dollar liquidity on the local market,” Mangudya said further.
In an update on Zimbabwe’s economy that was released last Wednesday, the IMF said bluntly that worse days lay ahead for the country, largely because of the government’s hesitant implementation of much-needed reforms.
“Executive Directors (of the IMF) noted with concern that Zimbabwe is facing an economic and humanitarian crisis, exacerbated by policy missteps and climate related shocks.
“These would require difficult policy choices from the authorities and support from the international community.
“Directors urged the authorities to make a concerted effort to ensure economic and social stability through the adoption of co-ordinated fiscal, monetary and foreign exchange policies, alongside with efforts to address food insecurity and serious governance challenges,” the IMF said without mincing its words.