• Companies have been sweating over high interest rates and tight RTGS liquidity
  • Government hiked IR by 120 pps to 200% while quarterly RM remains tight at below 5%
  • These, have affected productive borrowing and the consumer purchasing behaviours

Harare- Finance and Economic Development Minister, Professor Mthuli Ncube revealed that a tight monetary and fiscal policy stance will remain as the government tries hard to battle inflation. 

In a statement accompanying the 2023 national budget, Ncube said to curtail inflationary pressures, there is a need to mop up excess liquidity, and tighten the fiscal and monetary policies. 

Ncube’s words come at a time when many companies are sweating over the tight monetary policy measures currently employed by the government which have reduced consumer spending and made borrowing expensive. 

Latest companies to mourn about the tight monetary position were Meikles and Edgars Zimbabwe Limited while GB Holdings has called for the government to alleviate consumer purchasing power from the tight fiscal position if necessary. 

“In 2023, national annual average inflation is projected to continue slowing down to double-digit levels, underpinned by the continued tight monetary and fiscal policy stance and stable foreign exchange market,” Ncube said in a statement accompanying the 2023 national budget statement. 

“Central Bank is expected to deploy all tools at their disposal to ensure the attainment of these targets, are consistent with their mandates.”

Meanwhile, the government expects inflation to cap the year at 160%, from an earlier estimation of between 25% to 35%. In 2023, the government expects a month-on-month inflation target range of between 1% to 3% with a 1.5% budget deficit. 

However, it remains clouded whether civil servants’ bonuses in RTGS will not tear away the so-called applauded stability. 

Currently, the black market rate is trading at ZWL800-900 against a single greenback. 

However, of more concern are the 2023 elections where the government has a probability of flooding the RTGS liquidity to fund its campaign projects.

Between June 2017 and June 2018 an election period, RBZ increased its money supply by 41% from US$6.5 billion to US$9.1 billion with a month-on-month increase of 6.84%. During that time, government started its electoral campaigns, providing agricultural inputs to rural farmers as well as providing food staffs to its supporters. However, the following year was catastrophic, associated with shortages of fuel, core food staffs like bread and a year-on-year inflation rate which soared above 500%.

The government has been accused lately of tempering with RBZ operations undermining its independence. 

Equity Axis News