Govt Spurned Economy-saving Advice, Says Gono

RESERVE Bank of Zimbabwe governor Gideon Gono on Thursday blamed government’s failure to listen and implement the RBZ’s advice for the country’s economic decline.

Gono was briefing legislators on the bank’s operations and challenges since his appointment in November 2003.

Gono, who after his two-hour presentation declined to take questions after earlier saying the forum was “open to any questions and criticism”, said the bank’s policy framework index showed that only about 25% of the RBZ’s proposals were implemented by government.

“Zimbabwe is fighting an economic war which like any other nation it desires to win. It would have been a different story had government listened to some of the bank’s proposals,” said Gono.

Gono said only 25% of their proposals were implemented.

“The balance (75%) was not. Had it been the other way round we could be telling a different story,” Gono said.

Legislators were disappointed at Gono’s sudden departure as they had questions to ask him.

“It appears he only wanted to defend his actions by lecturing to us. Why did he run away from questions? It gave an impression that he wants things his way,” one MP said.

Questions they wanted Gono to respond include his clash with Minister of Finance Tendai Biti, the restructuring of the bank, quasi-fiscal operations and his alleged resignation.

The catalogue of policy advice given by the Reserve Bank to government includes:

lstabilisation of agriculture production to promote food security;

lThe fight against inflation through a combination of demand management, supply side as well as other structural interventions;

lInvestment promotion through institution of friendly pieces of legislation in the areas of mining, indigenisation and empowerment, with a solid assurance for the respect of private capital and property rights;

lUnity of purpose among social partners, that is government, labour, business and civic society to promote productivity;

lFinancial sector discipline in the provision of savings and investment financing packages;

lZero tolerance for corruption and underhand dealings in the economy at all levels;

lEnhancement of agricultural productivity through farm mechanisation;

lEfficiency in the management of parastatals and local authorities;

Gono said government’s failure to fully implement these suggestions contributed to the bank’s failure to protect and strengthen the local currency.

“The Reserve Bank failed to protect the local currency. Failure with a big ‘F’. The demise of the local currency shows that the country continues to need international support,” Gono said.

Gono said since 1980, Zimbabwe had received US$522 million from the International Monetary Fund, US$1,34 billion from the World Bank and US$524 million from the African Development Bank.

He said sanctions had resulted in increased suffering among Zimbabweans and reduced capacity utilisation in industry.

“Sanctions negatively affected the image of the country through negative perceptions by international financial markets,” said Gono.

Gono dismissed claims that sanctions on Zimbabwe were ring-fenced and targeted at only a few individuals.

He said companies were finding it difficult to access lines of credit because of the perceived country risk.

“As a result Zimbabwean companies are having to pay cash for imports,” Gono said.

“In the past 10 years, Zimbabwe has basically been on its own. The country has also relied on the resilience of its own economy and its people. Due to declining external budgetary support, Zimbabwe’s budget deficit has largely been financed from inflationary domestic bank sources,” said Gono.

BY PAUL NYAKAZEYA

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