So the Reserve Bank of Zimbabwe Act, the law that establishes and regulates the central bank states that the bank should issue 2 monetary policy statements per year. One of the statements according to the law must be issued in December and the other one in June.
This timetable has not been observed for sometime for example instead of issuing the statement in June last year the RBZ governor issued it in October. The market was expecting John Mangudya to deliver the latest monetary policy statement at the beginning of February but there has been silence.
With silence comes theories
Last week newspapers reported that there was disagreement between the RBZ governor and the Minister of Finance, Mthuli Ncube. One of the reports had detailed description of John Mangudya storming out of a meeting with Ncube in anger. The disagreement was said to be on the substance of the monetary policy.
The Reserve Bank of Zimbabwe Act however, says the governor of the central bank is responsible for monetary policy in consultation with the minister of finance. The two do not need to necessarily agree. When they don’t agree, it’s possible though that the policy announcement resultantly gets delayed. Veritas says:
The Reserve Bank of Zimbabwe Act states that the Bank’s responsibility for monetary policy is to be exercised “in consultation with” the Minister, which may or may not require agreement between the two
Both the central bank and Mthuli Ncube dismissed the story as false and they say there is no such disagreement or storming out of rooms.
Another rumour that spread recently was that a new currency was going to be issued in Zimbabwe by the Reserve Bank this week. This was started by former finance minister, Tendai Biti. The authorities denied this too and are insisting that Zimbabwe is not stable enough to have a new currency yet.
A new currency is definitely expected this year according to what Mthuli Ncube said on different fora. He gave a period of 12 months for this late last year. So we keep waiting and guessing it will happen any time now.
Could there be truth?
With the continued delay in the delivery of the monetary policy statement we are left speculating whether some or all of the allegations are true.
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One of the best ways to deal with speculation in this instance is for the authorities to simply deliver the Monetary Policy Statement.
REPUTATIONS AT STAKE
One of the greatest challenges is the alleged 1:1 Bond/US$ exchange rate.
You can never come out with your reputation intact either as the Minister of Finance or Governor of the Reserve Bank by a Monetary Policy that suggest parity in the two currencies.
Assuming that for some reason the Governor of the Reserve Bank may have still believed parity in the Bond and USD (1:1) there would have been sharp disagreements which need a review of the mindset.