THE Reserve Bank of Zimbabwe (RBZ) is set for a major overhaul if the MDC-T takes control of government after the the next elections due anytime from next month, a senior party official has said.
Clive Mphambela/Herbert Moyo
In an interview with the Zimbabwe Independent this week, Economic Planning and Investment Promotion minister Tapiwa Mashakada said the new MDC-T economic policy would address most of the shortcomings of the RBZ that have been observed over the 10-year period from 1998 to 2008, which had resulted in the country having a substantially weakened central bank after dollarisation.
“One of the things we will deal with is the mischief that has been abound at the Reserve Bank. The greatest mischief has been the issue of the Reserve Bank debt which now stands upwards of US$1 billion dollars,” said Mashakada, adding, “The manner in which we are going to resolve the debt overhang will necessitate a substantial capitalisation of the bank.”
Mashakada, who is MDC-T deputy secretary-general, said his party would strengthen the bank so that it could fulfil its mandate as a lender of last resort.
He said his party would enhance the autonomy of the central bank through a restructuring exercise to ensure it discharged its fiduciary duties of supervising of the banking sector and acting as bankers to the government of Zimbabwe.
“The central bank will also be capacitated to maintain price stability and effectively manage the country’s deteriorating balance of payments position,” he said.
“As you are aware at this stage this is a policy position and the details of the actual strategies will be made public when we assume control of government.”
The MDC-T launched its policy document three weeks ago dubbed “Art-Agenda for Real Transformation” that seeks to address a number of economic ills bedevilling the country.
The huge RBZ debt, now estimated at over US$1 billion, was accumulated since 1998 through the hyperinflationary 10-year period now referred to as “the lost decade”. It has added to the country’s growing debt burden.
The country’s total debt overhang, including both domestic and international arrears, is now estimated at over US$11 billion.
While presenting the first quarter report on the state of the economy in April, Finance minister Tendai Biti last week said government’s domestic arrears were also approaching US$1 billion.
In Art, the MDC-T says the country’s debt burden is not sustainable and has to be resolved as soon as possible.
“The MDC-T government will work with the international community and international financing institutions to accelerate negotiations on debt cancellation, rescheduling, restructuring and forgiveness with a view to reducing the debt service burden on the state to acceptable levels,” reads the document.
“When contracting new debt, the MDC government will make sure it will be inclusive, transparent, stakeholder-driven and with full parliamentary oversight. New debt will be used to fund development priorities and recurrent expenditure will be funded from the normal fiscal revenue base.”