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RBZ’s economic projections a big letdown: Businesses



THE Zimbabwe National Chamber of Commerce (ZNCC) says the policy measures and economic forecasts of the central bank have been misleading, leaving businesses who would have used them counting losses.


“Over the last two to three years, the policy measures and economic forecasts of the central bank have been well wide of the mark. Businesspeople and investors who took the Reserve Bank of Zimbabwe (RBZ)’s promises and projections seriously lost out,” the business lobby group said in its 2021 monetary policy analysis (MPS).

“Recent inflation and exchange rate forecasts have been catastrophically misleading and inaccurate. It is time for the central bank to tell things as they are – not how the government likes to think they are. It should seek to inform, not mislead.”

The ZNCC said it is shameful that the courts have to force the RBZ and government to release details of offshore loans, which the taxpayer will have to repay.

“These are sovereign liabilities and should reflect the sovereignty of parliament, where they should have been tabled as required under the constitution,” it said.

“Even after that court ruling, there is no mention in the monetary policy statement (MPS) of the central bank’s net foreign asset position, which has changed radically over the past year. Surely this merits some explanation and comment in the MPS?”

Above all, the ZNCC said the MPS should demonstrate a sense of context.

“It is apparent to most – outside the ruling party and its apologists – that Zimbabwe will not return to sustained economic growth without international re-engagement and a resolution of the country’s foreign debt crisis. It is idle to pretend otherwise, as in both the budget and the MPS,” it said.

The ZNCC said both the government and its banker need to acknowledge that the economy will not grow without investment; that forecasts of 18% formal employment growth under current conditions in just one year are fantasy; that living standards are falling, public services deteriorating, poverty and misery mounting.

“In all honesty, can the governor (RBZ governor John Mangudya) and his senior colleagues still stand by the promises in past MPS statements, the bulk of which have had to be abandoned with monotonous regularity?

“It is just two years since the currency was devalued with the flourish and promise of preserving value and regaining price stability. At that time the ‘official’ exchange rate was one-to-one. Today in the marketplace it exceeds 120 to one,” the ZNCC said.

The government’s growth projections in its national development strategy assume that an economy without domestic savings can invest more than 20% of gross domestic product each year, which it has managed to do in only six years since 1980, the organisation said.

“In five of those 6 years, during the Economic Structural Adjustment Programme, investment was substantially funded by donors and lenders. In other words, without international re-engagement and debt relief/restructuring, current macroeconomic policy is pie-in-the-sky,” the ZNCC said.

“It is obvious that the solutions lie in the political sphere not in monetary or fiscal policy.”