Siphakeme .Mnindwa
Rutendo Nyeve, Sunday News Reporter
MONETARY authorities have expressed confidence that a tight monetary policy stance, an increase in the policy rate and a growth in foreign exchange reserves will ensure economic stability and mitigate price and exchange rate volatilities.
They are optimistic that the measures will build on the December 2024 decrease in month-on-month inflation to 3,7 percent, down from 11,7 percent the previous month and assert that this trend should continue into 2025, reflecting the positive effects of stringent monetary policies characterised by increased interest rates and adjusted statutory reserve ratios.
Responding to enquiries from Sunday News, Monetary Policy Committee (MPC) member Mr Persistence Gwanyanya noted that month-on-month inflation has been on a downward trajectory since peaking to 36,7 percent in October 2024. This is attributed to the MPC’s monetary policy measures implemented on 27 September, 2024.
“The MPC raised the policy rate from 20 to 35 percent and standardised the statutory reserve ratios for demand and time deposits to 30 and 15 percent, respectively, up from 20 and 10 percent. These actions are designed to address price and exchange rate volatilities in the economy.
Looking ahead, we expect stability to persist in 2025 as monetary authorities maintain a tight monetary policy stance and continue to grow forex reserves, which will provide more than adequate coverage and guarantee the convertibility of the Zimbabwe Gold (ZiG).
The Reserve Bank of Zimbabwe (RBZ) has set a target for ZiG reserve money supply of no more than ZWG4 billion in 2024 to sustain month-on-month inflation between three to five percent,” Mr Gwanyanya stated.
In a recent media briefing in Bulawayo, Minister of Finance, Economic Development and Investment Promotion Professor Mthuli Ncube said economic stability remains Government’s priority.
He said the Government was going to employ a coordinated approach combining tight fiscal and monetary policies to achieve low inflation and ensure economic and price stability.
“For 2025, we will focus on revitalising the agricultural sector. We aim to make the most out of the favourable rains by supporting the Pfumvudza/Intwasa programme, which is designed to be climate-proofed and to assist our farmers, particularly in rural areas.
“On the monetary policy front, we will maintain a strict monetary policy with positive real interest rates and strategies such as increasing reserve requirements. Our goal is to implement necessary measures to stabilise the exchange rate, which all policy authorities will be able to follow.
“This co-ordinated fiscal and monetary strategy will be supported by a liquidity management committee that oversees liquidity in the economy and monitors overall trends. Working together, these strategies will help ensure exchange rate stability, macro-economic stability, and ultimately price stability,” Prof Ncube explained.
Reflecting on the previous year, Prof Ncube noted several achievements, including the successful introduction of the Zimbabwe Gold currency.
“It is never easy to transition from one currency to another and gain acceptance. The acceptance of the ZiG is a significant milestone for us.
“The foundation of price stability lies in a steady and stable fiscal environment where we do not live beyond our means and practice fiscal discipline. We have demonstrated strong fiscal discipline over the past few years and will continue on this path,” added Prof Ncube. — @nyeve14
