Don’t expect overnight change in economy: Zimbabwe’s central bank

HARARE, Feb. 9 — Zimbabwe’s central bank governor this week
presented his first post-Mugabe monetary policy statement, warning the
nation not to expect an overnight change in economic fortunes.

Zimbabwe’s former president Robert Mugabe resigned in November last year
after 37 years in power, paving way for a new government led by President
Emmerson Mnangagwa. Governor John Mangudya said more work was required to
grow the economy through opening up for business, increasing export
production and intensifying foreign investment attraction. He said the
country would continue to use the multiple currency regime introduced in
2009 until economic fundamentals are right for reintroduction of a local
currency. Meanwhile, the central bank was negotiating a
1.5-billion-U.S.-dollar facility with African Export-Import Bank
(Afreximbank) to guarantee investors’ funds as well as improve liquidity.

The bank was also arranging a 400-million-dollar facility to finance
critical imports and allow investors to repatriate funds, the governor
said. He said in 2017, the forex-starved country drew down 1.1 billion
dollars from various nostro stabilization facilities, which helped to
stabilize the foreign exchange market and sustain importation of critical
imports. A total of 290 million bond notes was also in circulation as of
December 2017, the governor said. “This is the money that is in the market,
together with the 1.1 billion dollars that we borrowed. It may not be as
liquid as we want but it is liquid enough to sustain the economy going
forward,” Mangudya said. The governor said he will give an update on the
amount of money that has been brought back into the country by companies
and individuals that externalized it when the amnesty expires at the end of
the February. “We are encouraged by the overwhelming response by people
who are taking measures to comply. The response has been positive from both
individuals and corporates,” he said.

Mnangagwa’s government in November issued a three-month amnesty to people
and companies that illegally stashed funds abroad, demanding repatriation
on a “no questions asked” basis. Mangudya said the central bank will
intensify re-engagement with the international community to resolve the
external payment arrears to the remaining International Financial
Institutions (IFIs) as well as bilateral creditors. “In this regard, the
government will follow the previously agreed process for clearing external
payment arrears to international financial institutions, which was endorsed
by the IFIs and Bilateral Creditors at a meeting held on the side lines of
the Annual Meetings of the IMF and World Bank in Lima, Peru, in October
2015,” the governor said. Zimbabwe owes the World Bank 1.15 billion
dollars, 601 million dollars to the African Development Bank and over 3
billion dollars the Paris Club, among other creditors. – XINHUA