- Country’s new currency has plunged since June introduction
- Committee consists of bankers, businessmen and academics
Zimbabwean Finance Minister Mthuli Ncube established a Monetary Policy Committee in his latest attempt to stabilize an economy in freefall.
The former economics professor, appointed last year to get the economy out of a two-decade rut, named a nine-member panel consisting of academics, bankers and the governor and two deputy governors of the nation’s central bank.
The committee, first mooted in March, is a step toward setting a benchmark interest rate and introducing inflation targeting as Zimbabwe’s newly introduced currency plunges and consumer prices surge.
Ncube reintroduced the Zimbabwe dollar, which the country had abandoned in 2009, and banned the use of foreign currency in June. The unit, a precursor of which was tied to the U.S. dollar at parity in February, is now trading at 11.99 to the dollar.
While Ncube has suspended the release of annual inflation statistics until February, economists estimate that the rate is between 230% and 570%. The nation’s 400,000 civil servants are demanding increased pay after the devaluation decimated their spending power.
The introduction of the MPC will help provide oversight of the central bank, though its mandate remains unclear, said Lloyd Mlotshwa, head of equities at brokerage IH Securities Ltd. in Harare, the capital.
“Until their terms of reference are clarified, it’s difficult to gauge how effective the monetary policy committee will be,” he said. “For example, if there is a vote on interest rates, does each member have one vote?”
The MPC members include Kumbirai Katsande, a former managing director of Nestle SA’s Zimbabwean unit, and Douglas Munatsi, the former chief executive officer of ABC Holdings Ltd., which owns lender BancABC. Also included are Eddie Cross, a former opposition politician, and Ashok Chakravarti, an economics professor at the University of Zimbabwe.
Ncube also named an 11-member board to the central bank, after the tenure of the previous directorate expired in May.
Those appointed include Caleb Fundanga, the former governor of the Bank of Zambia, Jerry Parwada, a finance professor at Edith Cowan University in Australia and Katsande, according to a statement emailed by the Treasury on Wednesday.
The board will be chaired by John Mangudya, the central bank governor. He will be deputized by Katsande.