Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mushayavanhu, has announced a major shift in the central bank’s approach towards rebuilding confidence in the bank’s policies, while acknowledging some limitations in previous guidelines.
The head of the central bank also revealed that the bank has also established a steering committee for monetary policy implementation, monitoring and evaluation to monitor the impact of its policies.
“We . .
“To rebuild our credibility and relevance, we must acknowledge that this is not ‘business as usual’ and undertake a personal transformation as well as develop a ‘new RBZ brand’ to restore public trust in the central bank.”
“We are all expected to adapt to accept this ‘paradigm shift’ to a new work culture that will instil in us the responsibility to provide operational effectiveness and excellence.”
Dr. Mushayavanhu took over from Dr. John Mangudya, who had been at the helm of the central bank since 2013, last month.
Two weeks ago, Dr. Mochayavanhu announced his first monetary policy that focused largely on currency and exchange rate stability, financial sector stability, optimal money supply management, foreign exchange mobilization and accumulation, and increased demand for regulated currency.
To achieve this, Dr Mushayavanhu said the RBI’s “change agenda” will focus on pushing for a comprehensive reorganization and “successfully” reorienting the bank’s functions, people, structures, systems, culture, decision-making and policy-making processes. “Implementing our basic obligations and duties.”
He said the appropriate “reorganization” of the Fed would be implemented in two phases. Dr. Moshayavanhu said the first phase has already begun, with a focus on diagnosing companies.
The second phase will follow shortly after the completion of a comprehensive and in-depth diagnosis of the company. Under the first phase, the Fed’s “New Strategic Core Framework” that guides the design and rebranding of the bank, guided by the core mandate of maintaining price stability and restoring market confidence, will be communicated to management and staff in a timely manner.
“As Governor, I want to reassure all staff and reiterate that Phase 2 is a normal process of learning the operational framework of the Bank and should not be seen as resulting in job losses or retrenchment.
“I will ask each department to prepare a comprehensive information memorandum to assist in the diagnostic process for Phase 2. This will allow me as your governor to have a solid understanding of the organisation’s people, systems, procedures and culture.
He said that the central bank’s programs will be better pooled, resourced and organized to achieve their statutory purpose in the next five years (2024-2029).
The primary objectives of the “back to basics” agenda are to restore lost market confidence and prevent undue damage to the central bank’s institutional credibility in the policy-making process.
Dr. Moshayavanhu added that the Central Bank will strive to ensure that information and data are of high quality and credibility; It is compiled and transmitted using best practices to avoid compromising the integrity of reports submitted to the market.
He said this was a crucial element to ensure effective monitoring and evaluation of monetary policy, internally and externally, and to acceptable standards.
To facilitate this, the RBI has established a Monetary Policy Implementation, Monitoring and Evaluation Steering Committee (MPIMESCO) that will use best practices to effectively monitor and evaluate the impact of the RBI’s policies.
“The Reserve Bank will strive to be an evidence-based institution – trusted in terms of data integrity and credibility. (The) MPIMESCO, which will establish itself as a trusted center for data validation to support policy formulation and impact monitoring and review, will serve as a transparency mechanism for the Reserve Bank to inform the public of the impact of policies.”
“Preconditions for achieving policy effectiveness will include identifying and plugging leakages and restructuring the Reserve Bank’s balance sheet from short-term pressures that are likely to undermine the effectiveness of our policies in the future.”
Between 2003 and 2008, Zimbabwe went through a period of hyperinflation that peaked in 2008. This period saw a significant rise in prices.
When the currency became worthless in 2008, Zimbabwe stopped printing it and allowed the trading of foreign currencies, especially the US dollar. This brought some stability.
Although relying on foreign currencies was beneficial, it was not a long-term solution. In 2016, Zimbabwe introduced bond notes and coins linked to the US dollar. However, confidence issues and lack of foreign exchange reserves led to the depreciation of the currency.
In 2019, a new Zimbabwean dollar was introduced, but it suffered from inflation again.
Retirees, policyholders and many others have suffered significant losses due to currency crises since 2008, severely eroding public confidence.
“Over the next five years, our strategic goal of restoring credibility and trust will be achieved by ‘going well’ – doing what we say we will do; doing the right things the right way the first time; and ensuring that what we say will happen,” Dr. Moshayavanhu said. “.
“We all need to re-energize and rebuild a new spirit of teamwork, collaboration and reconnection to serve the interests of the Reserve Bank and our country.
“Each of us must work to achieve the Bank’s mission and vision. We realize that we are all here for the job and not the individual. The Reserve Bank aspires to be the best employer in the financial sector to recognize your value and your contribution to the Bank to achieve its statutory goals. It declares