RBZ boss cites illiquidity as biggest threat to Zimbabwe’s economy

via New RBZ boss cites illiquidity as biggest threat to Zimbabwe’s economy May 8, 2014 NewsDay

THE new Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has pledged to do his utmost to help address challenges facing the economy which include low aggregate domestic demand, deterioration of the balance of payments, banking sector vulnerabilities and low industry capacity utilisation.

In his acceptance speech following his recent appointment, Mangudya said the lack of liquidity and limited circulation within the economy remained the biggest challenge facing the economy.

He said at the epicentre of the liquidity crunch was the country’s banking sector that has been operating without a lender of last resort for the past five years when the country adopted the multi- currencies regime.

“The Reserve Bank would need to attend to these challenges and come up with solutions for the betterment of the economy. The Reserve Bank would need to arrange for funding to capitalise itself and also becoming lender of last resort. We need to have a transparent and responsible central bank,” Mangudya said.

The central bank requires $150 million to perform the lender of last resort function.

Mangudya said the central bank was expected to promote strong and stable financial system and ensure that the multi-currency system needed to be buttressed and marinated to restore and enhance confidence and credibility.

“The multiple currency system is sine qua non for turning around the fortunes of the economy,” he said.

Mangudya said in the past three years people could not find jobs and companies could not pay each other as well as servicing loans with banks, tax revenues were going down and the tax base was narrowing. He said the greatest strength rested on relationship management, policy advice and the ability to put in place national beneficial financial structures to increase liquidity and resuscitate the economy so as to unlock value.

Mangudya took over from Gideon Gono, who had been at the helm of the central bank for the past decade.

 

COMMENTS

WORDPRESS: 10
  • comment-avatar
    ZimJim 7 years ago

    “Sine qua non
    Sine qua non or condicio sine qua non refers to an indispensable and essential action, condition, or ingredient. Wikipedia”

    i.e. “Bob & Co. MUST GO”!

    Simple.

  • comment-avatar
    John Thomas 7 years ago

    Say good bye to 150 mil if they get it.

    • comment-avatar
      ZimJim 7 years ago

      Yup. AND say goodbye to whatever resources they barter for it!

  • comment-avatar
    Jenandebvu 7 years ago

    Mangudya is sine qua non governor to rescue Zimbabwe. Waita mwana mudoko boy. Try Ben Benanke or Tito Mboweni as “sine qua” currency owners.

  • comment-avatar
    Justice 7 years ago

    Corruption/ZANU is the biggest threat, this guy has it all wrong!

    • comment-avatar
      Jono Austin 7 years ago

      Precisely-an indication of how he’s going to perform. He’s looking at the effect, not the cause.

  • comment-avatar

    Just a hollow statement.nothing in there to say what he is going to do. No solutions just the same old rhetoric regurgitated time and time again by all Ministers.But Im sure there was no shortage of standing ovations when he presented his speech!

    Still who cares he will be paid well regardless!

  • comment-avatar

    150 Mil?? What about all the money needed to repay the accounts Gono raided?? 150 Million won’t pay all the past debts. Biti did the smartest thing in closing the RBZ as it was an expense with no asset value.

  • comment-avatar

    Bring back the Zim-dollar so that Zanu goes one way!

  • comment-avatar
    Little dorrit 7 years ago

    We operated for four plus years without a lender of last resort – during which period the economy stabilized and would have grown had it not been nikuved. Clearly we do better without a lender of last resort – especially one that engineers the theft of people’s life savings in order to steal other people’s hard-earned forex. Account governor for all forex taken by your ” bank” since 1980 – down to the last till slip. How can a technically insolvent institution be given any responsibility in the country’s economy. Go away – forever – please. We will bank our money when the banks can be trusted to protect our money against predators