The delay by Reserve Bank of Zimbabwe governor John Mangudya to announce the 2019 Monetary Policy Statement (MPS) has left the business community in limbo as they cannot effectively plan for the new year without the necessary guidance over monetary issues.
The MPS, which is usually issued between the end of January and early February, has been delayed this year amid reports of disagreements between Mangudya and Finance and Economic Development Minister Mthuli Ncube over currency issues. The delay showed that the monetary element is a major issue to the current economic challenges facing the country, economic analyst Clemence Machadu told Xinhua in an interview. “Monetary authorities are at a crossroads as they know that this time around huge monetary decisions are not only inevitable but indispensable to recalibrate the economy and set it in the right trajectory, as opposed to scratching-the-surface methods of yesteryear,” he said.
Machadu added that the delay in announcing the monetary policy was due to the policymakers’ failure to arrive at a consensus in terms of a sustainable solution or their unpreparedness to deal with the consequences of those measures. “The central bank also seems to be in jittery mode as its previous monetary policy’s measures have caused market and pricing distortions and they are trying to be more careful,” he said. “But these delays have put the economy in a wait and see stance.” “The beginning of the year is a period when companies plan their strategies of the year ahead, basing on policy measures pronounced by both fiscal and monetary authorities,” Machadu said. “The current scenario leaves businesses, the investing public and other economic agents with only conjectures on what the likely scenarios are, as there is no policy direction,” he said.
The delay could also result in needless distortions arising from uncertainties about the future, with the parallel market also taking over the duties that are supposed to be played by the central bank, Machadu said. “The monetary policy drives economic activities in various sectors and its delay leaves market participants and other economic agents with no policies to be guided by. “Already, there are plenty of policies which are long overdue, such as the industrial policy, trade policy, local content policy… We therefore cannot afford to create a culture of delaying critical policies that different stakeholders require to make key decisions, especially given how we are in desperate need for foreign investment,” he said.