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Gono’s monetary policy bleeding business

ALTHOUGH Reserve Bank of Zimbabwe governor Gideon Gono is being hailed as creating a monetary policy that is going to turn around Zimbabwe’s fortunes, I am sure that most businessmen would disagree.



rdana, Arial, Helvetica, sans-serif”>Since the inception of his monetary policy in January, business in general has shrunk and a large number of companies are really struggling to survive. His latest measures cannot possibly rectify the situation.

It strikes me that the core business of the Reserve Bank swung to policing foreign currency trading and acting as a commercial bank to the banking sector and government. There is very little direction given apart from that.

I am not a banker and I might be looking at the forex situation rather simplistically but I cannot understand why the Reserve Bank finds it necessary to be so restrictive in forex dealing rather than let market forces set the status quo.

Surely the kind of measures that the authorities should be looking at are those that will encourge those Zimbabweans living abroad to send their money home, create foreign monetary investment and allow those fortunate people with forex to utilise it free of the threat of arrest.

Some simple measures could include:

* Allowing offshore funds to be deposited at an attractive exchange rate with the depositor having the opportunity of repatriating a certain percentage of what he brings into the country at a later date, should he require it;

* Allowing FCAs without the fear of the depositor losing what he has repatriated;

*Relaxing the current stringent laws, taking away the excitement that forex seems to engender;

* Allow the sale of property in forex provided that all fees and taxes are paid in forex and provided that a certain portion, say 25% be converted to Zimbabwe dollars;

* Allow business to hold a certain percentage of income from exports offshore for utilisation in their business operations. The company would have to declare its offshore holdings and show how the money is used; and

* Become an investment haven for foreign investors by allowing them to invest with extremely tempting interest rates.

The list of potential reforms is endless but each relaxation of the current laws can only bring more money into the country and create forex for the government. Because of the influx of forex the parallel market will disappear, prices will stabilise and the value of the Zimbabwe dollar against foreign currencies will improve as more forex comes into the market. Who knows, we may even see it trade again at the mythical $824 to US$1!

The alternative is to limp along as we are with a nation of businessmen who are ducking and diving just to survive whilst we slowly disappear into oblivion.


Joseph Smith,

Harare.

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