Makamba applauds IMF report, credits government
Business mogul and politician James Makamba has come out strongly in support of the government economic policies which have earned accolades in the recently published IMF Zimbabwe Staff Report for the 2022 Article IV Consultation which is generally known as the Staff monitoring program.
He described the report as a reflection of the positive policy intervention by the government of Zimbabwe as ably led by President Mnangagwa.
Dr Makamba revealed that the current stability and relative growth being experienced in the Zimbabwean economy is testimony to the commitment by President Mnangagwa to walk the talk towards the promised Vision 2030.
“When President Mnangagwa set the goals for the attainment of Vision 2030 as espoused under the NDS1 economic blueprint, he knew what was involved in the process to the attainment of that goal.
The President has delivered on his promise to stabilise the economy under TSP (Transitional Stabilisation Program), and subsequent economic growth that is being experienced today. The level of locally manufactured goods on supermarket shelves is testimony of that remarkable progress,” said Dr Makamba.
President Mnangagwa is on record pronouncing measures that his government was putting in pace to stabilise the local currency and make it the preferred currency for local transactions. Said the President then in that regard;
“So as we go forward, you shall begin to see the policies that my government will begin to put in place to make our currency strong and attractive. When one is holding the US dollar, they must be tormented and feel the urge to seek for the Zimbabwean dollar. That’s the trajectory we are taking as a country.”
True to his word, the President has delivered on this front as the local currency is fast becoming the hottest property that every transacting individual is seeking before making any purchases.
The result has been a phenomenal firming of the local unit on the hitherto marauding parallel forex market to the point of near convergence with official rates.
Dr Makamba was particularly full of praise for some of the market instruments that were introduced by the Reserve Bank of Zimbabwe such as the Gold Coins and the upward review of interest rates to the current 200 percent, which he said were instrumental in taming excessive money supply growth which had become the major driver of inflationary pressures on the economy.
“The upward review of the interest rate to 200 per cent has the net effect of suffocating speculative and consumptive borrowing at the expense of productive borrowing. This trend, which had created an influx of the ZWL$ on the market, resulting in surplus local currency chasing very little hard currency, has largely been responsible for loss of value by the local unit,” said Dr Makamba.
“The RBZ economic ingenuity can also be seen on the introduction of the Gold Coin as a secure investment vehicle. Where corporates and investment funds were stampeding for foreign currency as a store of value, these are now making a beeline to invest in a fungible instrument in form of Gold coins. The gold coin has sucked liquidity from chasing foreign currency towards a more secure non-inflationary instrument,” he added.
Dr Makamba alluded to the economic fact that redirecting available liquidity towards productive industries will have a long term positive effect of stabilising the country’s balance of payment position through import substitution.
The IMF report credited the Zimbabwean fiscal and monetary authorities for focused interventions especially in the face of a devastating Covid-19 pandemic which threatened livelihoods and the economy at large.
“The authorities’ swift response to the pandemic, including through containment measures and economic and social support, helped contain its adverse impact. The output recovery that resumed in 2021 would continue, albeit at a slower pace, with growth projected at about 3.5 per cent in 2022 and 3 per cent over the medium term in line with potential. While the authorities aim to limit the 2022 budget deficit at 1.5 per cent of GDP, nominal revenues and expenditures are underpinned by the assumptions of large price increases that deviate from the Reserve Bank of Zimbabwe’s (RBZ) objective of curtailing inflationary pressures.”
“Reflecting good rainfall and relaxation of containment measures, real GDP rose by 6.3 per cent in 2021. A tighter policy stance since mid-2020 (relative to 2019) has contributed to reducing inflation to 60.7 per cent year on year at end-2021,” said the IMF report.
Makamba expressed optimism with the direction that the economy is taking saying that he hopes for a day the business sector in Zimbabwe begins to demand payment in local currency.
“The business community in the country should now compliment government effort in strengthening the local unit by insisting to be paid in local currency. This will boost business and stakeholder confidence in the ZWL$ which is our source of national pride as a people,” said Dr Makamba.