Home » General » NEW GOVERNOR OF ZIMBABWEAN CENTRAL BANK SEES DISCIPLINE AS KEY TO RESOLVIVING ECONOMIC MESS

HARARE, May 8 –- The new Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya, says discipline is the key to solving economic challenges that the country is facing.

In his first public statement since taking office at the beginning of the month, Dr Mangudya said here Wednesday that Zimbabweans should be “courageous and skilful in managing the situation at hand”.

“I have optimism to believe that we shall overcome our challenges. We need to remain positive and work together as a team. It shall come to pass,” he said. “The greatest panacea of our challenges is discipline.”

Major challenges facing Zimbabwe include a lack of liquidity, low aggregate demand, deterioration of the balance of payments, banking sector vulnerabilities and low industry capacity utilisation.

Dr Mangudya said maintenance of the current multi-currency system was critical in turning around the fortunes of the economy.

He said discipline was critical in getting rid of rampant greed and corruption, to ensure that people lived within their means as well as in balancing the need between indigenization and attracting foreign direct investment (FDI).

Indigenisation, a policy aimed at increasing participation of locals in the mainstream economy, has been cited in some cases as discouraging investment.

“People cannot find jobs, companies cannot pay each other as well as servicing their loans with banks, tax revenues are going down and the tax base is narrowing,” said the governor, who succeeded Dr Gideon Gono, whoserved as governor from 2003 to 2013.

“The economy is weaker and the financial system is depressed. We need to be courageous and skillful to manage the situation on hand,” said Dr Mangudya.

He said the central bank did not have the “tools” to directly influence the economy at the moment as a result of dollarization but would continue giving advice on policy and putting financial structures in place to facilitate recovery in line with the country’s economic policies.

“It is also critical that the relevant authorities and the productive sectors of the economy promote value addition and increase export earnings to enhance the level of liquidity in the economy. The Reserve Bank will do its part,” he said.

In order to better play its role, the central bank would need to find ways to recapitalise itself and resume its function as lender of last resort to local banks, he said.

SOURCE: NEW ZIANA

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