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New monetary policy expected soon

Shakeman Mugari

GOVERNMENT is expected to announce a new monetary policy any time now, which analysts say is likely to have a far-reaching impact on the economy.

>The monetary policy is expected to deal with the much-awaited devaluation of the Zimbabwe dollar and a slashing of interest rates.

Economists say the monetary policy is unlikely to have a resounding impact on Zimbabwe’s ailing economy. Sources in the Ministry of Finance and Economic Development said the new policy would see the announcement of the much-awaited devaluation.

“Indications are that we are likely to have devaluation. However, the devaluation will not be in the same mould as the one that happened in February under the National Economic Recovery Programme (Nerp),” said a ministry official. “We might actually see a devaluation of between 100% and 200%.”

The official said although slashing interest rates was anticipated it was likely that government would remain silent on the issue.

Analysts said the policy should deal with the galloping inflation, the official exchange rate that is lagging far behind the parallel market rate, as well as the interest rates.

“The new policy, if there is any, should make it clear to the responsible authorities that we need balance of payment support to stabilise our foreign exchange rate,” said a Zimbabwe Economics Society official.

“It needs to be clear that in a country where exports are declining and low investor confidence there is need for the Bretton Woods Institutions. The go-it-alone attitude will not get us anywhere. There is also need to address the investor confidence which is at its lowest.”

Under Nerp, cobbled together in February, government promised to review the exchange rate quarterly.

Analyst now say the programme has been overtaken by events due to government’s bureaucratic decision-making.

Some analysts are however, sceptical that the new policy will spur the economy on.

“There is probably nothing new that Herbert Murerwa will tell us,” an analyst from a stock broking firm said.

“It might be more rhetoric yielding no results. We even doubt whether the policy will be tabled.”

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