RESERVE Bank governor Gideon Gono has accused the government of failing to implement his “modest and well-thought-out recommendations” towards stabilisi
ng the economy due to lack of “requisite commitment and discipline” on fundamental aspects of economic reform.
The government, however, attributes the current economic crisis to sanctions rather than mismanagement.
In a detailed catalogue of policy advice the RBZ has given to government since 2003, Gono said the country’s economic turn-around was being affected by lack of commitment to fight corruption and indiscipline, stakeholder unilateralism and pursuit of selfish sectoral interests.
Gono also cited government’s failure to instill discipline in matters of policy-implementation, monitoring and review in ministries and restraining fiscal expenditure. He also cited failure to enhance agricultural productivity, among other key issues.
The catalogue was a supplement to the January 2008 Monetary Policy Statement issued by Gono last Thursday.
Gono said against the backdrop of slippages on the implementation front, “it should therefore not come as a surprise to any Zimbabwean, great, small and otherwise, that our country has continued on a downward and inevitable path of economic decline with inflation remaining the country’s number one enemy”.
Commenting on inflation in his statement, Gono took a swipe at the failure by the Central Statistical Office (CSO) to release inflation figures on time.
The CSO falls under the Ministry of Finance.
“Yes, our inflation is the highest in the world, but this should not tempt us to sweep our blemishes under the carpet. Where there is no information, markets will tend to fill in the gaps through distorted and imprecise wild guesses, which cause more damage than would be the case when the actual information is made known to the public in time,” said Gono.
He said latest data indicates that inflation was 26 470,8% for November last year.
“As monetary authorities, we call upon those whose role is to collect, compute and publish economic statistics to do so timeously so as to preserve credibility of national accounts, as well as enabling proper business planning,” he said.
Gono said as a result of corruption and policy inconsistencies across all sectors of the economy, the public had continued to lead a life of shortages and economic inconveniences characterised by power blackouts, water cuts, lack of basic commodities and lately cash shortages.
The RBZ chief in December told the ruling Zanu PF extraordinary congress that corrupt top government and ruling party officials were responsible for the cash shortages as they were actively involved in illegal foreign currency dealings.
Gono publicly offered to give information on cash barons to the Parliamentary Portfolio Committee on Budget and Finance, but the scheduled meeting was cancelled ahead of the dissolution of parliament for the elections.
Guruve North legislator David Butau, who chaired the committee, was implicated in the deals and fled the country.
Despite the establishment of the Anti-Corruption Commission, corruption is rife in both the public and private sector and Gono said there was need for the commission to be “fully capacitated to discharge its duties effectively”.
The policy advice catalogue outlined RBZ recommendations to government, intended impact and progress on implementation on the plan for various sectors of the economy.
On agriculture and the land reform programme, Gono said the RBZ was concerned by the slow progress on the issue of Bilateral Investment Promotion and Protection Agreements (BIPPAs), full land utilisation, dam construction and rehabilitation of irrigation schemes.
“The RBZ availed funds for dam construction and irrigation development. Resources from the National Budget are still insignificant and most dams are still incomplete,” said Gono.
The central bank boss added that the misalignment between fuel prices for agriculture and the public transport sector needed to be addressed, adding that the government’s late announcement of producer prices was affecting production.
He said although government had reviewed the producer prices of maize and wheat, there was still need for further alignment to ensure grower viability.
Gono said there was also need to come up with “appropriate maize pricing for millers” as they were still receiving maize at subsidised prices.
The RBZ chief also expressed concern over the undercapitalisation of the Agricultural Bank of Zimbabwe (Agribank) which is expected to play a key role in financing farmers.
Gono said the central bank had advised government to hasten the pace of macroeconomic convergence by dealing with disparities between agriculture lending rates and market rates as well as multiple exchange rates for gold, tobacco and the rest of the economy.
However, the fiscal authorities were still to address this issue.
On economic indigenisation, Gono said the RBZ advised legislators and government to strike a balance between the objectives of the programme and the need to attract foreign investment through a gradual approach.
However, Gono said the indigenisation proposals by the RBZ had not been embraced.
On incomes and pricing policies, Gono said the introduction of price controls in June last year had affected business viability and there was need for relevant authorities to fully implement three protocols of the Social Contract signed by labour, business and the government.
“Policy inconsistencies still exist in some areas, particularly with regard to the pricing of some goods and services. Business viability is still being eroded by inflation, hence the need to institute corrective measures,” said Gono.
Gono said there was urgent need for parastatals and local authorities to be functional as preconditions for meaningful economic recovery.
He said parastatals utility Zesa, Zinwa, Air Zimbabwe, the NRZ and TelOne should charge realistic economic tariffs to sustain their operations and provide efficient service to the nation.
On the mining sector, Gono said delays in finalising mining legislation was undermining investor confidence while “disorder and unstructured diamond mining activities continue to stifle growth”.
On streamlining fiscal expenditures in line with the economy’s revenue-generating capacity, Gono said line ministries were still experiencing expenditure overruns and this had an impact on inflationary pressures.
Gono said successful macroeconomic stabilisation and development would “come as products of tangible implementation of consistent policies in a holistic manner”.
Commenting on the pending elections in his policy statement, Gono urged all political parties to remain peaceful.
“We should not therefore, choose the path of self-mutilation as did happen elsewhere here in Africa where brothers and sisters, sons and fathers, daughters and mothers are decapitating each other all in the name of politics,” Gono said. “Let us show political maturity and choose the path of peaceful progression into the future. Like seasons of the year, elections come and go, but people’s lives will self-perpetuate throughout generations.”