The Reserve Bank of Zimbabwe (RBZ) held a crisis meeting with captains of industry on Monday at which they pledged to a commitment to work closely in curbing the parallel market exchange rate volatility.
In an update shared at the close of the meeting the central bank governor, John Mangudya said both parties acknowledged the positive economic achievements made so far which include year on year inflation reduction to end the e year at 60,7% from 348,6% recorded in 2020 with local manufacturing production going to 80% of products on the market were locally produced.
“As a way of continuing with efforts to stabilize the economy, there was a need for everyone, through a collective responsibility, to exhibit good leadership and exercise restraint on the volatility of the foreign exchange rate. The Bank should continue fighting inflation through restrictive monetary policy and building foreign exchange reserves as a way of augmenting the defence of the value of the local currency,” Mnagudya said.
Government and the RBZ committed to come up with strategies to enhance the attractiveness of the local currency and strengthen its demand in the context of the multicurrency system currently in place with the Bank being challenged to continue to refine the foreign exchange auction system and to timely fund auction allotments in line with the auction rules.
The relevant regulatory authorities were challenged to carry out enhanced due diligence on auction participants and to monitor the use of funds obtained through the auction and resort to suspension for periods not less than 6 months and blacklisting.
Business was challenged to ensure compliance with the provisions of Statutory Instrument 127 of 2021 now embedded in the Finance Act (Amendment Number 7 of 2021), with emphasis on avoiding abuse of auction rules and funds from auction allotments, exchange rate manipulation or currency attacks.
The government was tasked to come up with appropriate incentives for exporters to improve production and productivity.
“The Financial Intelligence Unit (FIU) should continue penalising currency manipulators and abusers of foreign currency auction rules and breaches of the Bank Use Promotion Act while the government has to continue with efforts to reduce the level of informalisation in the economy and to maintain fiscal consolidation,” added Mangudya.