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Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya, has assured Zimbabweans that there is nothing to worry about, despite the value of the Zimbabwean dollar declining once more.
Both the official rate and the street rate have been comparatively stable in August but this week, the local unit fell to ZWL$4 712.16: US$1 from ZWL$4 604.62: US$1 three weeks ago.
<a href="https://businesstimes.co.zw/zim-dollar-implodes-again/">Business Times</a> quoted Mangudya as saying the central bank is in control of the situation. He said:
<blockquote>
There’s nothing to worry about as the exchange rate remains relatively stable. I think Zimbabweans need prayers as they start panicking with something that is within reach. We have tools to ensure there is no excess liquidity in the market.
The central bank remains confident that the continued sale of gold coins and gold-backed digital tokens will sustainably take away steam from the store-of-value demand for local currency during the short to medium term, with positive spinoffs on the substance of obtaining price and exchange rate stability.
Furthermore, the central bank’s strategic resolve for continued monetary prudence will add further impetus to the positive prospects of the local currency over the medium term.
In addition, the ongoing monitoring and surveillance by the Financial Intelligence Unit will effectively minimise incidences of exchange rate manipulation and abnormal pricing practices.
</blockquote>
Meanwhile, Finance and Investment Promotion Minister Mthuli Ncube said that it is baffling that a foreign currency parallel market still exists in Zimbabwe.
Ncube said the parallel market “shouldn’t even exist” as “every piece of policy that is necessary for a stable currency has been put in place”.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Pindula News

Zimbabwe Dollar Falling Once More, Mangudya Says Nothing To Worry About

The Reserve Bank of Zimbabwe (RBZ) is in the final stages of preparing to introduce gold-backed digital tokens as a medium of exchange for domestic transactions, alongside the US dollar, according to Governor Dr John Mangudya. In his presentation of the Mid-Term Monetary Policy Statement, Mangudya said:
<blockquote>
The Bank is at an advanced stage in preparations for the rolling out of GBDTs (Gold-Backed Digital Tokens) for transactional purposes in Phase II of the project under the code or name ZiG, which stands for Zimbabwe Gold. It is envisaged that the transactional phase will see GBDTs complimenting the demand for the US dollar in domestic transactions as retailers will be offered a safer, more convenient, and value-preserving medium of exchange. As such, appropriate awareness campaigns would be conducted in all provinces and districts of the country to educate the public on the use and benefits of GBDT.
Consultations with various stakeholders including the Confederation of Zimbabwe Industries (CZI) and the Zimbabwe National Chamber of Commerce (ZNCC) and the Retailers Association of Zimbabwe (RAZ) have already been undertaken and banks are now configuring their systems to allow for the issuance of cards which will be denominated in ZiG.
</blockquote>
According to Governor Dr John Mangudya, the gold coins introduced as an alternative store of value have been effective in mopping up over ZW$35 billion from the sale of 36,059 coins. He said only 769 coins (2% of the total sold) have been redeemed, indicating their value as a store of value.
Mangudya said to further expand value-preserving instruments and increase accessibility, the central bank introduced Gold-Backed Digital Tokens (GBDT) on May 12, 2023. These tokens are fully backed by physical gold held by the Bank. He said as of July 21, 2023, RBZ had issued 325,024,524 milligrams (equivalent to 325.02 kgs) of gold through 11 issuances, valued at ZW$50.50 billion and US$7,794.87.
Economic blogger Tinashe Murapata expresses scepticism regarding the introduction of gold-backed digital tokens as a medium of exchange, suggesting it may be an attempt to reintroduce the Zimbabwe dollar. Murapata raises concerns about multiple currencies in circulation and the potential conversion of local Nostro to ZiG, making it another form of Zimbabwean currency. He said:
<blockquote>
The Gold Backed Digital token will now evolve from being an investment vehicle to being a currency. This will be called ZiG. It is being touted as an alternative for USD. Never mind the efficacy of how this currency will work. But, does it not bother the authorities that Zimbabwe will have another currency on top of the four currencies will already have. Namely. RTGS, Nostro, Bond notes, USD. This will mean five competing currencies with five different exchange rates. Why would a retailer accept ZiG, whose price is determined by the variability of the Auction rate? Well, they will be forced to. The second worry is that local Nostro is a direct substitute of ZiG. Meaning the authorities could easily convert all local nostro to ZiG. On the ostensible claim of facilitating transactions. The post-election period will be very interesting as ZWL is now effectively less than 20% of money supply. Meaning probably 10% of transactions. ZiG will be another attempt at the new ZWL currency. Buyer beware.
</blockquote>
If the RBZ is successful, Zimbabweans will be able to purchase groceries using gold coins and gold-backed digital tokens. To prepare for Phase II, which is the transactional phase of the Gold-Backed Digital Tokens (GBDT), the RBZ plans to conduct an awareness campaign in all national provinces. 
<h3><a href="https://www.pindula.co.zw/">More Pindula News</a></h3>

RBZ Preparing To Introduce Gold-backed Digital Tokens As A Medium Of Exchange

On Wednesday, August 9, 2023, the Governor of the Reserve Bank of Zimbabwe, Dr. John Mangudya, released the Mid-Term Monetary Policy Statement. He highlighted that the implemented policy measures have set the country on a path towards macroeconomic stability. The focus will be on maintaining the current tight monetary policy stance to ensure price stability and achieve the benefits of monetary and fiscal consolidation. Regarding global economic developments, a slowdown in global GDP growth is expected due to reduced growth in advanced economies. This has led to a decrease in global commodity prices. These global factors have had spillover effects on the domestic economy through trade, imported inflation, and financial linkages, Mangudya said.

<ul style="list-style-type: circle;">
<li>Download: <a href="https://news.pindula.co.zw/wp-content/uploads/2023/08/Mid-Term_Monetary_Policy_Statement_2023.pdf">Mid-Term_Monetary_Policy_Statement_2023</a></li>
</ul>
However, despite the volatility in the exchange rate during the second quarter of 2023, the domestic economic prospects remain robust, Mangudya added. Economic growth is projected at 5.3% for 2023. Mangudya said the measures implemented by the Government and the Bank have stabilized the exchange rate and domestic consumer prices. Inflation, which rose sharply in June 2023, has reversed considerably and is expected to decline further as the policy measures take full effect.
He notes that the Reserve Bank of Zimbabwe will maintain the current monetary policy stance, utilizing open market operations and interest rates to stabilize the exchange rate and inflation expectations. The strong macroeconomic fundamentals and commitment to monetary and fiscal consolidation will sustain stability in domestic consumer prices and the exchange rate.
<h3><a href="https://www.pindula.co.zw/">More Pindula News</a></h3>

Mangudya Emphasises Macroeconomic Stability In Mid-Term Monetary Policy Statement

The Reserve Bank of Zimbabwe owes more than $4 billion to banks and companies, including commodities giant Trafigura Group and South African Airways, for fuel, corn, and other goods and services.
Private credit has saved Zimbabwe’s economy from total collapse, according to John Mangudya, the central bank’s governor. He told Bloomberg:
<blockquote>
The creditors were supplying Zimbabwe in good faith, supplying things like fuel in advance, which was consumed by Zimbabweans. It’s only right that the country repays.
</blockquote>
Trafigura is Zimbabwe’s second-largest private creditor, owed $66 million, behind Holbud, which is owed $85 million. SAA is owed $61 million for airline services. Mangudya expects the recent appreciation of the Zimbabwean dollar against the greenback to continue, which should alleviate pricing pressures.
John Mangudya expects the recent appreciation of the Zimbabwean dollar against the US dollar to continue, which he believes will alleviate pricing pressures. He also expects to see negative month-on-month inflation in July.
The central bank’s quasi-fiscal activities have been criticised by the International Monetary Fund, which has urged authorities to end them. Zimbabwe cannot access credit from international financial institutions as it is already $17 billion in arrears. Zimbabwe’s Treasury plans to seek lawmaker approval to assume the central bank’s external obligations.
Former Finance Minister Tendai Biti is also on record criticising the central government for off-budget spending such as subsidies, loan guarantees, and tax exemptions, as well as the accumulation of off-budget debts or other financial obligations and sidelining of Parliament in key economic policy decisions. Biti argues that laws affecting the economy have mostly been made through Statutory Instruments and the Presidential Powers (Temporary Measures) Act, bypassing the role of Parliament. He argues that Parliament should take back its powers to act on policies that affect the economy to prevent negative consequences for millions of people, particularly pensioners. 
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Reserve Bank Of Zimbabwe Owes Over $4bn For Goods And Services

According to economists and business executives, the demand for commodities and services has started to weaken due to the rising cost of living. The depreciation of the Zimbabwe dollar has eroded the buying power of many people, particularly those formally employed and earning local currency.
Economics professor <a href="https://www.pindula.co.zw/Gift_Mugano/">Gift Mugano</a> stated that disposable incomes have been significantly eroded by inflation, leaving consumers with little to spend. While 80% of transactions are now conducted in US dollars, there is not enough liquidity in that currency to stimulate demand. Mugano believes that the majority of workers in the formal and informal sectors are not earning enough to stimulate demand. He said last week:
<blockquote>
It’s not about dollarisation or the US dollar dominance, but it is about liquidity, which is quite small.
That is why we have seen prices in the US dollars going down because there is no money to stimulate demand.
Buying power has been eroded and the US dollar incomes have been typically quite low.
</blockquote>
The <a href="https://www.pindula.co.zw/Confederation_of_Zimbabwe_Industries/">Confederation of Zimbabwe Industries (CZI)</a> president, Kurai Matsheza, stated that companies are beginning to witness a massive decline in aggregate demand. He said:
<blockquote>
Certainly until and unless the pay adjustments match the depreciation (of the currency), aggregate demand naturally diminishes and more importantly, would the employers be able to match the salaries to the levels of (currency) depreciation? I don’t think so.
 What we are seeing in our businesses is the coming down of demand; it is drying up even the order quantities have also come down.
</blockquote>
However, the chief executive of the <a href="https://www.pindula.co.zw/ZNCC/">Zimbabwe National Chamber of Commerce (ZNCC),</a> Christopher Mugaga, believes that aggregate demand is not determined by incomes and salaries from the formal sector because they are insignificant and compensated by artificial demand. He said:
<blockquote>
Aggregate demand is not determined by incomes and salaries from the formal sector because they are very insignificant. That insignificant portion is compensated by artificial demand because there are already fears of shortages of products.
</blockquote>
According to some analysts, the decline in order quantities for manufacturers may not be due to weakening demand, but rather changes in trading terms. Schweppes managing director, Charles Msipa said companies are now insisting on upfront Zimbabwe dollar payments, which has become difficult for some. Msipa added that it is still too early to determine the demand patterns due to these changes, particularly in the formal sector, which predominantly uses the Zimbabwe dollar. Msipa stated that it is hard to know if the uptake of the product is low when retailers do not have their products on their shelves.
Last month, the Finance and Economic Development Minister, Prof <a href="https://www.pindula.co.zw/Mthuli_Ncube/">Mthuli Ncube</a>, announced policy measures to stabilize the economy. However, the domestic currency has depreciated by roughly 393% against the US dollar.
While some suggest dollarisation may help, Reserve Bank of Zimbabwe Governor, Dr <a href="https://www.pindula.co.zw/John_Mangudya/">John Mangudya</a>, stated that full dollarisation of the economy would lead to weakening demand for goods and services. He said the rate at which US dollars go out is faster than the rate at which they come in, and dollarisation would lead to companies scaling down and job losses.
<h3><a href="https://www.pindula.co.zw/">More Pindula News</a></h3>

Business Executives: Demand Weakens Due To Rising Cost Of Living

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said that the latest policy measures implemented by fiscal and monetary policy authorities have strongly impressed the private sector.
Speaking in an interview with <a href="https://www.businessweekly.co.zw/we-are-almost-there-declares-mangudya/">State media</a> on the sidelines of the Afreximbank Annual Meetings that ended on Wednesday in Accra, Ghana, Mangudya said the measures will address currency and price instability in the economy. He said:
<blockquote>
Definitely, we have struck the right chord, that’s what we have been longing for as a country, and because of the reaction to those measures by both the private sector and Government, it means we have struck the right chord.
</blockquote>
Mangudya said what is now left is consistency as it will increase confidence. He said:
<blockquote>
So what we now need in the country is to consistently apply our policies in the way we have put them on the table and I do believe what we have put in place is the best foot forward which we don’t need to change anymore.
One can only improve but not change the measures that we have put in place. That way we become credible, we become consistent and increase confidence, because confidence is the best currency that any Government, any central bank, can give to its society.
</blockquote>
Asked why this time will be different given unsuccessful measures in the past, Mangudya said:
<blockquote>
We cannot continue to live in the past, we now need to go forward and we cannot go forward using historical reasons which will not make us prosper.
</blockquote>
Below are some of the latest measures introduced by authorities to tackle price and exchange rate volatility:
<ul>
<li>Businesses are now allowed to retain 100 percent of foreign currency proceeds from domestic sales.</li>
<li>Treasury announced it would assume all sovereign external debt payment obligations from the RBZ.</li>
<li>Treasury also said Customs duty is now payable in local currency, with the exception of designated or luxury goods and where an importer opts to pay in foreign currency.</li>
<li>The RBZ’s Monetary Policy Committee resolved to increase the bank policy rate from 140 percent to 150 percent per annum in response to the recent increase in inflation.</li>
<li>The weekly auction was changed and now offers just US$5 million a week with bid limits set at a minimum of US$1 500 and a maximum of US$50 000.</li>
<li>A new wholesale auction system, where banks bid on behalf of their clients, was introduced. The interbank maximum trading limits of between US$100 000 to US$500 000.</li>
</ul>
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

We Have Struck The Right Chord, Says Mangudya

<a href="https://pindula.co.zw/Reserve_Bank_of_Zimbabwe">Reserve Bank of Zimbabwe</a> (RBZ) Governor <a href="https://pindula.co.zw/John_Mangudya">John Mangudya</a> has for the umpteenth time ruled out dollarisation arguing that Zimbabwe has no capacity to do so.
Addressing delegates attending the Chamber of Mines of Zimbabwe (CoMZ) annual conference in Victoria Falls on Thursday, Mangudya urged Zimbabweans to embrace the Zimbabwe dollar saying dollarisation was not only unattainable but would also have negative consequences. He said:
<blockquote>
Let’s be resolute to maintain that to go forward. The only country that we have is this country.
My message is that the country cannot sustain itself by using other people’s foreign currency.
So, you need to embrace your own. That’s what it means. That 30% should not drive the other 70%, they should co-exist properly without manipulation.
This year up to the 30th of April, 70% of the exports came from mining. So, you are consistently performing well.
The foreign currency belongs to the exporter because 75% of the money belongs to the export.
I have read that many people are confused that we can now dollarise because of these funds. These funds aren’t ours.
You can’t take it from Zimplats or Unki or Mimosa’s accounts and then we go and dollarise the economy.
We have no capacity to dollarise because the money in the banks is not ours.
It belongs to the exporters so that they can export more. Now people are always confused that this US$11 billion is ours, no it’s not ours
The numbers don’t lie. If you can measure it, you can manage it. Ours is 25% which is supposed to go through the rest of the economy.
That’s what we use for auction, for reserves and for paying debts. That’s what it is.
</blockquote>
Some economists, trade unions and opposition political parties have been calling on authorities to dump the Zimbabwe dollar as most shops and service providers are demanding US dollars and using parallel rates for products pegged in the local currency.
Even Government departments and parastatals, such as the Zimbabwe National Roads Administration (ZINARA) and ZESA Holdings, constantly adjusts fees and tariffs to keep up with rising inflation.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Mangudya Says Zimbabwe Cannot Sustain Dollarisation

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya said that gold-backed digital tokens that were introduced last week are working well as 140 kilogrammes of the tokens valued at more than ZWL$14 billion were taken up by the market.
The central bank says it has sold 31 866 Mosi-oa-Tunya gold coins since their introduction last year for ZWL$25.8 billion.
Mangudya told <a href="https://www.sundaymail.co.zw/rbz-confident-of-price-stability">The Sunday Mail</a> that the huge demand for gold coins and digital tokens could help remove excess liquidity and stabilise the Zimbabwe dollar. He said:
<blockquote>
The purpose of digital gold tokens, just like the physical gold coins, is to store value, act as an investment tool and mop up excess liquidity from the market.
The reason the parallel market exchange rate goes up is that we are a dual-currency economy.
In a dual-currency economy, where there is a local currency and the US dollar, many will obviously find the US dollar as the most attractive.
By providing digital gold tokens, we are saying do not go to the parallel market, but store value in the coins and tokens, which are known worldwide as a store of value.
Therefore, it is working very well, because the demand for the gold coins is higher than the supply, while the electronic version is actually working very well.
About $14 billion was used to purchase digital gold tokens.
That money could have gone into the parallel market but was not channeled there and was used to buy digital gold tokens. So, it is working.
</blockquote>
The gold tokens are being introduced in two phases.
The first phase entails issuing gold tokens with a vesting period of 180 days for investment purposes.
The second phase involves issuing gold-backed digital tokens held in either e-gold wallets or e-gold cards being tradable and capable of facilitating person-to-person transactions.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Digital Gold Tokens Working Well - Mangudya

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya said that the digital gold tokens will assist in stabilising the Zimbabwe dollar by acting as an alternative store of value and helping facilitate transactions for ordinary people.
The central bank is set to release the digital gold tokens on Monday, 08 May.
Speaking to <a href="https://www.sundaymail.co.zw/digital-gold-tokens-out-tomorrow">The Sunday Mail</a>, Mangudya said the decline in value of the local currency is being driven by “unlimited demand” for the US dollar.
He said the digital gold tokens will complement the Mosi-oa-Tunya gold coins in mopping up excess liquidity in the market. Mangudya said:
<blockquote>
The tokens function in the same way as the physical gold coins and will work in parallel with the physical gold coins introduced last year to mop up excess liquidity, reduce demand for the US dollar as a store of value and stop the depreciation of the local currency.
</blockquote>
He said the digital tokens will be issued in milligrammes, and will be available for sale at banks in both foreign and local currency, with specific accounts such as e-gold wallets or e-gold cards for holding the assets. Added Mangudya:
<blockquote>
The purpose is threefold, as it seeks to save, invest and be for transacting purposes, with one having the option to buy the digital gold coins in foreign currency or in local currency.
The digital gold tokens have the same characteristics as the physical gold coins; the vesting period of 180 days is the same and will act as a store of value, among other things.
However, the beauty of digital gold tokens is the issue of visibility and also in terms of financial inclusion. 
Anyone can buy them. We are talking of 1000 milligramme which is valued at 6 cents.
There was an outcry on the exclusivity on gold coins, with some saying they can only be accessed by a few, so with digital gold tokens, they will be accessible to everyone.
</blockquote>
Last week the RBZ said applications of tokens will be accessible from banks for a minimum of US$10 for individuals and US$5 000 for financial institutions, corporates and other entities.
Payment for digital tokens or physical gold coins in local currency shall be at a 20 percent margin above the willing-buyer, willing-seller interbank mid-rate.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Digital Gold Tokens To Enhance Financial Inclusion - Mangudya

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has announced the introduction of gold-backed digital tokens to be used “both as a means of payment and a store of value.”
In a statement on Friday, Mangudya said the gold-backed digital tokens will be introduced in two phases, starting on 08 May 2023.
He said tokens will be available for sale, through banks, in both foreign currency and Zimbabwe dollars. Reads the statement:
<blockquote>
Pursuant to the resolution of the Monetary Policy Committee (the MPC) on 28 March 2023 to complement the issuance of physical gold coins with gold-backed digital products, the Bank wishes to advise that it will be issuing gold-backed digital tokens with effect from 8 May 2023.
The gold-backed tokens will be fully backed by physical gold held by the Bank.
As previously advised, the issuance of gold-backed digital tokens is meant to expand the value-preserving instruments available in the economy and enhance divisibility of the investment instruments and widen their access and usage by the public.
The issuance and usage of the gold-backed digital tokens shall be in two phases as follows:
<ol>
<li>Phase 1: Gold-backed digital tokens will be issued for investment purposes with a vesting period of 180 days and redeemable in the same way as the existing physical gold coins. The tokens will be available for sale, through banks, in both foreign currency and Zimbabwe dollar. Banks will create dedicated or specific accounts for the holding of the gold-backed digital tokens (e-gold wallets or e-gold cards). Holders of physical gold coins, at their discretion, will be able to exchange or convert, through the banking system, the physical gold coins into gold-backed digital tokens.</li>
<li>Phase 2: The gold-backed digital tokens held in either e-gold wallets or e-gold cards will be tradable and capable of facilitating Person-to-Person (P2P) and Person-to- Business (P2B) transactions and settlements. It, therefore, means that the gold-backed digital tokens would be used both as a means of payment and a store of value.</li>
</ol>
The Bank also advises that the pricing of the gold-backed digital tokens in foreign currency shall remain the same as the pricing model of the physical gold coins as informed or guided by the international gold price as determined by the London Bullion Market Association (LBMA) PM fix.
Payment for the gold-backed digital tokens or physical gold coins in Zimbabwe dollar shall remain at the current 20% margin above the willing-buyer willing-seller interbank mid- rate.
</blockquote>
More: <a href="https://zero.pindula.co.zw/">Pindula News</a>

RBZ To Introduce Gold-backed Digital Tokens On 8 May

The <a href="https://www.pindula.co.zw/Reserve_Bank_of_Zimbabwe">Reserve Bank of Zimbabwe (RBZ)</a> is reportedly planning to stabilise the Zimbabwe dollar by introducing a new currency backed by gold tokens.
<a href="https://www.sundaymail.co.zw/rbz-introduces-gold-backed-digital-currency">The Sunday Mail</a> reported that RBZ would issue digital gold tokens backed by gold held at the central bank. This will allow people holding Zimbabwe dollars, which have been losing value, to exchange them for the tokens. RBZ governor John Mangudya said:
<blockquote>
 The movements in the parallel market rate are mainly because of the expectations of increased foreign currency supply in the market when the tobacco marketing season opened. However, the supply of foreign currency over the past three weeks has been lower than expected. That expectation raised the rates because people thought there will be more money in the market.
It means anyone with local currency would want to convert it to foreign currency. We are addressing this demand for store of value by increasing the number of gold coins in the market so that we manage that demand.
We shall also soon be introducing digital gold tokens to ensure that those with low amounts of local currency are able to purchase the gold units so that we leave no one and no place behind.
</blockquote>
The value of the gold-backed currency is based on the current market price of gold and can be used for transactions just like any other type of currency.
The value of the Zimbabwe dollar has decreased significantly against the USD in recent months. The official exchange rate, set by the central bank, is 1 USD to 1 000 Zimbabwe dollars. However, obtaining this rate is challenging because the unofficial market values it at over 1 750 Zimbabwe dollars per USD.
The Zimbabwean government has implemented several measures to stabilize the Zimbabwean dollar, which has been volatile in recent years due to a variety of economic and political factors. Some of these measures include:
<ol>
<li>
Currency Reforms: In June 2019, the government of Zimbabwe reintroduced the Zimbabwean dollar as the sole legal tender, replacing the multi-currency regime that had been in place for over a decade. The reintroduction of the Zimbabwean dollar aimed to reduce currency fragmentation and enhance the effectiveness of the monetary policy.
</li>
<li>
Tightening monetary policy: The Reserve Bank of Zimbabwe (RBZ) has increased interest rates to tighten monetary policy and control inflation. The RBZ has also limited the amount of money that can be withdrawn from banks to reduce demand for foreign currency.
</li>
<li>
Boosting exports: The government has implemented measures to promote exports and reduce imports. For example, it has introduced export incentives, increased funding for agriculture, and banned the importation of certain goods to encourage local production.
</li>
<li>
Improving fiscal policy: The government has implemented a range of fiscal measures to reduce expenditure and increase revenue, such as the introduction of taxes on electronic transactions and a reduction in government spending.
</li>
<li>
Negotiating with international organizations: The government has engaged with international organizations such as the International Monetary Fund (IMF) to access financial assistance and technical support. The IMF has approved a $400 million loan to Zimbabwe to support economic reforms and stabilize the currency.
</li>
</ol>
However, these measures have not been effective so far because of a range of factors, including political instability, ineffective implementation, and external factors such as global economic conditions.
Government critics say members of the public do not have confidence in the government, especially after the 2008 era during which the Zimbabwe dollar plunged.
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RBZ Introducing New Currency Backed By Gold Tokens

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said inflation has stabilised as 70% of all transactions are in US dollars, reported <a href="https://www.newsday.co.zw/business/article/200009985/inflation-is-not-on-paper-you-feel-it-rbz-chief">NewsDay</a>.
Addressing delegates at the release of the Confederation of Zimbabwe Industries (CZI) 2022 Manufacturing Sector Survey last Thursday, Mangudya, however, acknowledged that there has been a widening between the official forex rate and the parallel market rate. He said:
<blockquote>
We have seen the parallel forex market widening over the past three weeks and we have an idea of what is causing it.
Our job is to make sure that we rein in that disparity between the official exchange rate and parallel market (one) and, of course, the effects to make sure it doesn’t go into the private system.
But on inflation, we are happy that it has been going down from about 30%, month-on-month in July 2022, to 0.7% in January, month-on-month, -1,6% in February, and 0,1% in March this year.
Inflation, Hon minister (Industry and Commerce Minister Sekai Nzenza) and colleagues is — if you are in hyperinflation you will feel it. You don’t see it on paper. Inflation is felt.
If you don’t feel inflation — never worry about people and statistics and don’t worry about historical issues, worry about month-on-month inflation.
</blockquote>
According to Zimstat, the annual inflation for March was 87.6%, down from 92.3% in February, while the month-on-month inflation was 0.1% last month from -1.6% in the comparative prior period.
The statistics were based on the new blended calculation measured using a weighted average of items priced in Zimbabwean dollars and United States dollars.
Before the new “blended rate”, inflation was being measured using the local currency only.
A fall in inflation does not mean prices are decreasing. Rather, it reflects the slow pace of price increases.
More: <a href="https://zero.pindula.co.zw/">Pindula News</a>

Zimbabweans Not Feeling Inflation - Mangudya

The <a href="https://www.pindula.co.zw/Reserve_Bank_of_Zimbabwe">Reserve Bank of Zimbabwe (RBZ)</a> has revised the terms for mandatory retentions on USD Point of Sale (POS) and e-commerce settlements. 
In a statement seen by Pindula News, Nedbank told its clients that the central bank had directed that the tourism sector was no longer exempted from mandatory retentions. Reads the statement issued on 28 March 2023:
<blockquote>
Dear Valued Client.
<h2>EXCHANGE CONTROL DIRECTIVE RY002-2023 DATED 3 FEBRUARY 2023: MANDATORY RETENTIONS ON USD POS AND E-COMMERCE SETTLEMENTS</h2>
Further to the abovementioned Directive, the Reserve Bank of Zimbabwe has revised the terms for mandatory retentions on USD POS and E-Commerce settlements in respect of the tourism sector. 
To this end, the tourism sector is no longer exempt from mandatory retentions with effect from 6 February 2023. As such, the Bank shall be mandated to surrender to the Central Bank export Retentions on Export and Domestic sales as follows: –
• 25% Retention on POS settlements acquired from foreign-issued cards.
• 15% Retention on POS settlements on transactions issued by domestic cards 
Kindly be advised that the Bank shall be collecting the Retentions in retrospect (at the prevailing interbank market rate on the day of the transaction), dating back to 6 February 2023. 
In need of further clarity, kindly contact your respective Business Manager, SME Banker, or Branch Manager.
</blockquote>
The RBZ announced last year that players in the tourism and hospitality industry shall retain 100% of their foreign currency earnings. 
This was meant to allow them to quickly recapitalise and procure the necessary goods and services required by tourists and travellers, said RBZ governor John Mangudya in his Monetary Policy statement of 7 February 2022.
<ul>
<li><a href="https://zero.pindula.co.zw/wp-content/uploads/2023/03/Monetary-Policy-Statement-February-2022.pdf">Monetary-Policy-Statement-February-2022</a></li>
</ul>
Mangudya said this was a measure in response to the adverse effects of COVID-19 on the tourism sector, which was hard hit by the pandemic.
<h2><a href="https://zero.pindula.co.zw/">More Pindula News</a></h2>

RBZ Has Revised Terms For Retentions On USD POS & E-Commerce Settlements

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has sought to clarify the issue of Gold Dealing Licence fees following the publication of Statutory Instrument 32 of 2023 on Monday, 20 March 2023.
The Statutory Instrument set the fee for a Gold Dealing Licence at US$200 000 per annum.
In a statement issued this Tuesday, 21 March, Mangudya said that only gold refiners will pay US$200 000, while permits for gold-buying agents cost US$2 500 per annum. Reads the statement:
<blockquote>
<h2>GOLD DEALING LICENCE FEES AND GOLD BUYING AGENCY FEES</h2>
It has come to the attention of the Reserve Bank of Zimbabwe (the Bank) that there has been some misunderstanding pertaining to payment of gold dealing licence fees and gold buying agency fees following the publication of Statutory Instrument 32 of 2023, (Gold Trade (Licence Fees) Amendment Notice, 2023 (No.1)), on 20 March 2023.
In line with its mandate to promote the development of gold mining and production in Zimbabwe, the Bank wishes to provide clarity as follows:
(a) Statutory Instrument 32 of 2023 provides for annual licence fees payable by gold dealers – that is, persons licensed to buy, refine and export gold. Thus only gold refiners shall be liable to pay the US$200 000 licence fees.
(b) Gold buying agents are issued with permits by holders of a gold dealing licence and in the case of Fidelity Gold Refinery (Private) Limited, the agents are appointed to buy gold on its behalf in areas where it does not have gold buying centres and the permit costs US$2 500 per annum.
In that regard, a gold dealing licence is distinct from a gold buying agency permit.
</blockquote>
Of late, stakeholders in the gold mining sector have been complaining over increases in gold sector licensing fees, but <a href="https://www.newzimbabwe.com/mthuli-ncube-pegs-gold-dealers-licence-at-us200k/">NewZimbabwe.com</a> reported government sources as saying licensing fees will allow the lower levels of society to benefit from the yellow metal.
Earlier this month, Fidelity Gold Refiners (FGR) general manager, Peter Magaramombe, told <a href="https://businesstimes.co.zw/rains-wash-away-gold-output/">Business Times</a> that gold production in Zimbabwe dropped by 26% to 3.79 tonnes in the first two months of this year from the 5.129 tonnes reported in the preceding comparative period.
The significant drop in gold output has been blamed on heavy rains received in most parts of the country.
More: <a href="https://zero.pindula.co.zw/">Pindula News</a>

RBZ Speaks On Gold Dealing Licence Fees

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya said that he has no problem with Qatar-based broadcaster, Al Jazeera, following the release of snippets of a documentary exposing alleged money laundering involving the country’s gold.
Al Jazeera recently set the cat among the pigeons by announcing that it will release a four-part documentary titled: “Gold Mafia” exposing how Zimbabwe’s gold is used to launder money by top ZANU PF and RBZ officials.
On Monday, Mangudya issued a statement denying claims that the central bank is involved in money laundering, describing the allegations as scurrilous and malicious.
Speaking during a breakfast meeting in Harare, Mangudya said he has “nothing against” Al Jazeera. Said Mangudya:
<blockquote>
That is why I said we don’t know the reasons why those people who were interviewed told Al Jazeera what they did. I have nothing against Al Jazeera.
It was those people who were interviewed, who were volunteering, who were trying to be big people in talking about Zimbabwe, that this is a place where you can launder your funds.
</blockquote>
Mangudya said the allegations of money laundering through the RBZ cannot go unchallenged. He said:
<blockquote>
The snippets for the documentary that were coming are not rumours or grapevine.
When something like that is advertised, I will not sit down and wait when someone is demonising the central bank and Government of Zimbabwe. I am the custodian of the financial system in this country.
Money laundering is serious. Even when people say I responded fast or I was supposed to wait, wait for what when the house is burning?
You are told that there is an allegation of money laundering in your country and the Reserve Bank is the one cleaning it and you sleep comfortably waiting, that’s not acceptable. We are a central bank that has its own integrity.
We were just removed from the FATF (Financial Action Task Force) grey list which is about money laundering and counter financing terrorism because we worked very hard for it, then someone is trying to put a knife in us for whatever reasons.
</blockquote>
According to <a href="https://www.newsday.co.zw/local-news/article/200008492/ive-nothing-against-al-jazeera-mangudya">NewsDay</a>, Zimbabwe was removed from the grey list in March 2022, after being placed on the list in 2019.
More: <a href="https://zero.pindula.co.zw/">Pindula News</a>

Mangudya Says He Has "Nothing Against" Al Jazeera

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has said Zimbabwe remains under economic sanctions that have hampered the movement of funds and trade in the past two decades.
On Monday Mangudya said there are no sanctions on Zimbabwean imports and exports, including on gold, and this was interpreted by some commentators as an admission by the central bank governor that the country is not under sanctions.
Speaking in an interview with <a href="https://www.herald.co.zw/mangudya-clears-air-on-economic-sanctions/">The Herald</a> on Tuesday, Mangudya said sanctions in the form of the Zimbabwe Democracy Recovery Act (ZDERA) remain. He said:
<blockquote>
Sanctions on Zimbabwe are through ZDERA and augmented by OFAC through placing entities on the designated list of sanctions.
What this means is that whilst these sanctions are not directly on trade per se they negatively affect the movement of funds within the international banking system.
The Zimbabwean banking sector has lost a substantial number of corresponding banking relationships over the past 20 years, through de-risking, because of the OFAC sanctions.
OFAC sanctions also affect the smooth flow of funds across borders as financial institutions are obligated to comply with OFAC sanctions.
ZDERA on the other hand is designed to put a credit freeze on official financial flows to Zimbabwe.
</blockquote>
ZDERA was passed by the United States government in 2001 in response to what was described as the “fast-track land reform” in Zimbabwe.
In 2021, the U.S. Embassy in Harare said ZDERA calls for the Government of Zimbabwe to restore rule of law, hold free and fair elections, commit to equitable and transparent land reform, and subordinate military and national police to civilian government.
More: <a href="https://zero.pindula.co.zw/">Pindula News</a>

I Did Not Say There Are No Sanctions On Zimbabwe - Mangudya

Zimbabwe is now measuring inflation using a weighted average of items priced in Zimbabwean dollars and United States dollars (USD), Reuters reported citing a government statement issued on Friday.
Previously the official rate was based only on items in the local currency.
In his 2023 monetary policy statement released earlier in February, <a href="https://www.pindula.co.zw/Reserve_Bank_of_Zimbabwe">Reserve Bank of Zimbabwe (RBZ)</a> governor, <a href="https://www.pindula.co.zw/John_Mangudya">Dr John Panonetsa Mangudya</a>, urged economic players to focus more on blended inflation since large parts of the Zimbabwean economy had dollarised.
The USD is widely used in the country alongside the Zimbabwe dollar and South African rand.
The government relaunched the Zimbabwean dollar in 2019 after a decade of dollarisation, but in 2020 it authorised the use of foreign currencies as part of measures to respond to the Covid-19 pandemic.
Last year, it said the multi-currency system would be maintained for a further five years.
Blended inflation for February stood at 92.3 per cent year-on-year compared to 101.5 per cent in January, the <a href="https://www.pindula.co.zw/Zimbabwe_National_Statistics_Agency_(ZIMSTAT)">Zimbabwe National Statistics Agency (ZIMSTAT)</a> said.
<h2><a href="https://zero.pindula.co.zw/">More Pindula News</a></h2>

Zimbabwe Now Measuring Inflation Using USD, Local Currency

The Foreign Exchange Auction System’s backlog of foreign exchange allotments has been resolved, according to the <a href="https://www.pindula.co.zw/Reserve_Bank_of_Zimbabwe">Reserve Bank of Zimbabwe (RBZ)</a>.
The central bank’s statement seen by Pindula News ascribed the trend to higher foreign currency inflows into the nation of southern Africa. Reads the statement issued by RBZ Governor, Dr <a href="https://www.pindula.co.zw/John_Mangudya">John Panonetsa Mangudya</a>:
<blockquote>
<h2>CLEARANCE OF BACKLOG OF FOREIGN EXCHANGE AUCTION ALLOTMENTS</h2>
The Reserve Bank of Zimbabwe (the Bank) is pleased to advise the public that it has cleared the backlog of foreign exchange allotments under the Foreign Exchange Auction System. This development is a result of improved foreign exchange inflows in the Country.
Going forward, the Bank will abide by the Foreign Exchange Auction Rules and ensure that foreign currency is available to successful bidders within 14 days from the date of auction. This will go a long way in maintaining a stable foreign exchange rate and sustaining financial stability in the economy.
</blockquote>
In December 2022, deputy governor Dr Innocent Matshe stated that the apex bank was <a href="https://zero.pindula.co.zw/rbz-forex-allotments-between-june-2020-and-december-2022/">striving to shorten the period</a> between the time that allotments are made and run and the time that the allottee receives money in foreign currency accounts.
<h2><a href="https://zero.pindula.co.zw/">More Pindula News</a></h2>

RBZ Speaks On Clearance Of Foreign Exchange Allotments Backlog

The Reserve Bank of Zimbabwe (RBZ) says nearly 500 out of the 4 000 small gold coins it introduced on 15 November 2022 have been purchased so far in their first week.
The central bank introduced gold coins, known as the Mosi-a-Tunya gold coins, to be used as a store of value by both individuals and companies.
This has resulted in the reduction of the excessive money supply since their introduction, according to RBZ governor John Panonetsa Mangudya as quoted by <a href="https://zbcnews.co.zw/2022/11/19/public-acceptance-of-gold-coins-a-signal-of-improved-financial-confidence/">ZBC News</a>. He said:
<blockquote>
The high demand for gold coins is a positive move to the country’s fight against high inflation and going forward we are maintaining the status quo, there will be no excess liquidity that caused exchange rate instability like in the past.
</blockquote>
In his Mid-Term Monetary Policy Statement released on Thursday, 11 August 2022, central bank governor John Mangudya said:
<blockquote>
Following the successful launch of the gold coins on 25 July 2022 and in response to public demand, the Bank shall introduce and release into the market gold coins in smaller units of a tenth ounce, quarter ounce and half an ounce for sale with effect from mid-November 2022.
The features, characteristics and the sale terms and conditions shall remain the same as the current trading arrangements of the gold coins in circulation.
</blockquote>

High Demand For Gold Coins A Positive Development - Mangudya

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has advised that all banknotes that have been issued by the central bank remain legal tender, following the rejection of smaller denomination notes by some businesses.
Reports indicate that most transport operators and shops in Bulawayo are now rejecting the ZW$20 notes, while ZW$5 and ZW$10 have since been rejected by the transacting public.
Responding to questions from  Sunday News Business, Mangudya said all the bank notes remain legal tender in the country. He said:
<blockquote>
While we are not privy to that predicament raised, it is important to advise that all the bank notes that we issued remain legal tender which can be deposited at banks and banks can bank the same at the RBZ under the normal banking process.
</blockquote>
Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu urged businesses to accept the $20 banknotes to avoid inconveniencing the public. Mutashu said;
<blockquote>
We encourage businesses to accept all notes including the ZW$20 notes and not inconvenience the transacting public.
Rejection of particular denominations is usually synonymous with high inflation as currency value erodes, unfortunately, it is only in our environment that economic agencies decide to reject notes.
In Malawi, Zambia, South Africa and other jurisdictions, even the smallest of the denominations like coins are accepted at the point of transacting.
</blockquote>

$5, $10, $20 Notes Still Legal Tender - Mangudya

The Government has <a href="https://news.pindula.co.zw/2022/08/11/rbz-to-release-gold-coins-in-smaller-units/">reiterated plans to introduce smaller gold coin denominations</a> in a bid to make them accessible to people from all walks of life.
The Reserve Bank of Zimbabwe <a href="https://news.pindula.co.zw/2022/07/25/rbz-releases-first-batch-of-the-2-000-mosi-oa-tunya-gold-coins-25-july-2022/">introduced the Mosi-oa-Tunya gold coins on the 25th of July</a> as part of a raft of measures meant to stabilise the economy and quench the appetite for foreign currency as a store of value.
Speaking to Sunday News in an exclusive interview Saturday, the Minister of Finance and Economic Development, Professor Mthuli Ncube, said the demand for gold coins has been very high. He said:
<blockquote>
We are happy with the uptake of the gold coin and we so far sold in excess of Z$8 billion since their introduction. Many people are happy with hedging their investments against the gold coins instead of holding onto cash as they have been doing in the past. We are now looking at introducing a smaller denomination to make these gold coins more inclusive across the entire Zimbabwean population. We want every Zimbabwean not to be left behind in our efforts to manage our economy. Every Zimbabwean will be afforded a chance to acquire these gold coins.
</blockquote>
Prof Ncube also spoke about the need to maintain the 200 per cent bank interest rate as well as measures that were put in place by Government to stabilise the local currency. 
He also said the expected rate of economic growth for this year has been reviewed from 5.5 per cent to 4.6 per cent.
Prof Ncube said the Government was happy with the uptake of gold coins. 
He said Zimbabweans had been largely shunning the local dollar in favour of the US dollar, which is acceptable abroad and better at holding value long term.
Previously, RBZ Governor Dr John Mangudya said smaller gold coins are expected to go on sale in November so that ordinary people can invest in them and store value for their local currency. 
<h2>Pindula News</h2>

Zimbabwe Reiterates Plans To Introduce Smaller Gold Coin Denominations

The Reserve Bank of Zimbabwe (RBZ) Monday, 25 July 2022 released the first batch of the 2 000 Mosi-oa-Tunya gold coins. In a statement seen by Pindula News, the central bank said it will daily publish gold coin prices based on the previous day’s London Bullion Market Association (LBMA) PM Fix plus 5% to cover the cost of production and distribution of the gold coins. RBZ Chief, John Mangudya said: 
<blockquote>
Pursuant to the resolution of the Monetary Policy Committee of 24 July 2022 and the Bank’s Press Statement of 4 July 2022, the Bank has today released the first batch of 2,000 Mosi-oa-Tunga Gold Coins to market.
Local agents commenced selling the gold coins on an agency basis, at the initial price of US$1,823.8 per gold coin or ZWL805,745.35. Gold coins can also be purchased in denominated currencies such as the South African Rand, Botswana Pula, Australian Dollar, British Pound and Euro.
The Bank shall publish from tomorrow 26 July 2022, the Mosi-oa-Tunya gold coin price by 0800 hours daily, which shall be based on the previous day’s London Bullion Market Association (LBMA) PM Fix plus 5% to cover the cost of production and distribution of the gold coins.
<h2>The gold coins have the following specifications: –</h2>
• Denomination 1 Oz, for the time being; 
• Material Gold; 
• Purity 22 karats (91.67%); 
• Diameter 32 mm; 
• Weight 33.93g; 
• Shape Round;
• Edge Type Reeded with serial number engraved;
• Quality Proof; and 
• Thickness 2.63mm.
<h2>The gold coins have the following qualities;</h2>
i Liquid Asset Status; 
ii Prescribed Asset Status; 
iii Collateral Acceptability; 
iv Tradable; 
v Serial numbering; and 
vi Central Bank buy-back when required by the holder of the gold coin.
<h2>The Mosi-oa-Tunya gold coins are being sold with an accompanying bearer certificate with the following security features;</h2>
• Relief background features; 
• Numbering’ 
• Guilloche Pattern border; 
• Guilloche Pattern underground; 
• Hologram Feature 
• Variable QR Code; and 
• Security paper with watermark
<h2>The following selling arrangements are being applied for different buyers:-</h2>
i. Domestic buyers including individuals may buy in local currency or foreign currency;
ii. Domestic corporates including institutional investors will be allowed to buy gold coins in local currency or foreign currency, subject to quantity restrictions where it is deemed necessary;
iii. Exporting entities shall buy Mosi-oa-Tunya gold coins in foreign currency, from their retained export portions. Notwithstanding this requirement, exporters whose annual export receipts in 2021 were less than US$1 million, shall require a specific Exchange Control approval to be permitted to utilise a portion of their surrender portion that is payable in local currency, to purchase the gold coins; 
iv. Local banking institutions shall not be allowed to buy Mosi-oa-Tunya gold coins for own portfolios up until such a time as the Reserve Bank may grant the permission. Thus, for the time being, banks can only receive the coins from the Reserve Bank for onward selling to their customers on behalf of the Reserve Bank; and 
v. Non-resident (international) buyers shall only buy the Mosi-oaTunya gold coins in denominated foreign currencies.
The gold coins are an alternative investment product for those who want to store value. Gold is a safe and secure reserve asset throughout the world. 
The Bank would like to remind the investing public that purchases of the gold coins will be done in line with KYC principles. In this regard, the Bank will not allow banks to lend for the purposes of purchasing gold coins as this will put pressure on the ability of banks to settle their transaction at the Reserve Bank.
Furthermore, the Bank will also not allow liquidation of blocked funds for purposes of buying gold coins. Since the Government has already put in place a resolution framework for dealing with blocked funds under the Finance Act, No. 7 of 2021. 
The Bank shall be releasing additional gold coins into the market on a demand basis, guided by the agents.
John P. Mangudya 
Governor 
25 July 2022
</blockquote>
<h2><a href="https://news.pindula.co.zw/">Pindula News</a></h2>

RBZ Releases First Batch Of The 2 000 Mosi-oa-Tunya Gold Coins: 25 July 2022

The <a href="https://www.pindula.co.zw/Reserve_Bank_of_Zimbabwe">Reserve Bank of Zimbabwe (RBZ)</a> has said <a href="https://news.pindula.co.zw/2022/06/27/reserve-bank-of-zimbabwe-introduces-gold-coins/">gold coins were introduced</a> for curbing inflation and the preservation of wealth.
As part of efforts to facilitate a wide range of investment portfolios the central bank has seen it necessary to roll out gold coins.
This Friday Reserve Bank of Zimbabwe (RBZ) Governor, Dr <a href="https://www.pindula.co.zw/John_Mangudya">John Mangudya</a> outlined the roadmap to introducing the gold coins, including their intended purpose. <a href="https://www.zbcnews.co.zw/rbz-starts-minting-of-gold-coins/">ZBC News’ Business Editor, Stanley James</a>, quotes Mangudya as saying:
<blockquote>
The Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) resolved to introduce gold coins into the market as an instrument that will enable investors to store value, the gold coins will be minted by Fidelity Gold Refineries (Private) Limited and will be sold to the public through normal banking channels, the primary aim and objective is to preserve the store of value for wealth so the process has started and minting has also started. It is all about focusing on different trading platforms that have an effect in curbing inflation while focusing on the preservation of wealth in terms of its intrinsic value.
</blockquote>
The apex bank’s chief added that the coins are open to everyone, that is, industry, commerce, individuals, and investors among many others. He also said the gold coins will be purchased using the set of units within the multicurrency basket.
Gold is an important element for investors in hedging against the effects of inflation. 
Analysts have also backed the idea of the gold coins citing their positive effects on long-term financial planning models.
Earlier this week, the Monetary Policy Committee noted that the minting of gold coins is important for restoring confidence in the country’s financial markets.
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RBZ Speaks On Reason Behind Introduction Of Gold Coins, Who Can Have Them

The Governor of the Reserve Bank of Zimbabwe (RBZ), Dr John Panonetsa Mangudya has postponed the first 2022 Foreign Exchange Auction that was scheduled for Tuesday the 11th of January.
Mangudya said the auction will now be conducted on the 18th of this month.            
In a statement, the central bank said the move is in line with the need to facilitate proper documentation systems delayed due to the COVID-19 pandemic.  Pindula News presents the statement:
<blockquote>
<h2>IMPACT OF COVID-19 ON SUBMISSION OF FOREIGN EXCHANGE AUCTION BID DOCUMENTATION AND DEFERMENT OF FIRST AUCTION OF 2022</h2>
The Reserve Bank of Zimbabwe wishes to advise the public that the spike in Covid-19 infections has impacted negatively on the ability of Authorised Dealers to timeously submit essential information required to carry out the due diligence on auction bid documentation submitted by their clients. As a result, Authorised Dealers were not able to submit all the required information for the first auction of 2022, originally set for 11 January 2022.
In order to give Authorised Dealers sufficient time to carry out the necessary due diligence and submit the required documentation, the first auction of 2022 will be held on 18 January 2022. 
</blockquote>
RBZ’s last auction was on <a href="https://news.pindula.co.zw/2021/12/14/rbz-forex-auction-results-14-december-2021/">14 December last year.</a> The central bank then closed the Auction System in line with the resolutions of the Monetary Policy Committee (MPC) meeting of 3 Dec 2021 and in view of the festive season that was approaching.
<h2>More: <a href="https://news.pindula.co.zw/">Pindula News</a></h2>

RBZ Postpones The 1st 2022 Foreign Currency Exchange Auction

The Reserve Bank of Zimbabwe (RBZ) on Monday met with the business community over a number of issues including the “pricing madness.” Pindula News presents the outcome of the meeting as reported by the central bank.
<blockquote>
<h2>OUTCOME OF THE MEETING BETWEEN THE RESERVE BANK OF ZIMBABWE AND CAPTAINS OF INDUSTRY AND COMMERCE ON MEASURES TO ADDRESS THE VOLATILITY OF THE PARALLEL MARKET EXCHANGE RATES. </h2>
The Reserve Bank of Zimbabwe (the Bank), together with the Ministries of Finance and Economic Development and Industry and Commerce, met with leaders of the Zimbabwe business community on 11 October 2021 to deliberate and find solutions to the volatility of the parallel market exchange rates which adversely affects economic growth by creating business uncertainty as well as increasing domestic prices.
The parties unanimously agreed that whilst macroeconomic fundamentals were sound to support exchange rate stability, immediate measures were necessary to contain the movement of the parallel exchange rates. It was noted that the recent volatility in the parallel exchange rates was due to behavioural factors. In order to address these negative behavioural traits, it was agreed that a holistic and collaborative approach was required. In that regard, Government, the Bank and the business community made firm pledges and commitments as follows:
<h2>Government</h2>
Government affirmed its commitment to continue supporting the foreign exchange auction as a dependable and transparent source of foreign currency in the country.
<h2>Reserve Bank of Zimbabwe</h2>
The Bank undertook to: 
i. continue tightening money supply under its conservative monetary targeting framework to ensure that money supply would not be a source of exchange rate destabilisation;
ii. accelerate implementation of special attractive money market instruments including exchange rate linked instruments as an alternative investment avenue for local currency to the holding of USD; 
iii. review bank policy rates to curb speculative borrowing;
iv. refine and streamline the foreign exchange auction system to ensure that it continues to play its price discovery role in the foreign exchange market; and 
v. deal with the funding backlog of foreign exchange allotments and take appropriate measures to ensure that the backlog does not recur.
<h2>Bankers Association of Zimbabwe (BAZ) BAZ committed to: –</h2>
i. ensuring that all bids submitted to the foreign exchange auction are authentic;
ii. ensuring continued due diligence on all their customers and applications for foreign exchange; 
iii. refraining from facilitating parallel market transactions through matching; 
iv. improving efficiency in facilitation of Letters of Credit; 
v. enhancing reporting of suspicious transactions; 
vi. promptly implementing regulatory directives on freezing of bank accounts for participants in illicit foreign currency transactions; 
vii. promoting confidence in the banking sector by clearing the foreign currency backlog promptly; and
viii. improving oversight on bank overdrafts to ensure that broad money is kept under check.
<h2>Retailers Associations</h2>
The Retailers Associations requested Government to level the playing field in their respective operating environments by attending to: –
i. the menace of foreign currency traders milling outside and around shops and trading areas;
ii. identifying and bringing to book funders of foreign currency traders; and
iii. dealing with informal traders operating without licences and sometimes outside legal or policy parameters.
The retailers noted the need to adhere to expected commitments to implementing provisions of Statutory Instrument 127 of 2021 with emphasis on three focus areas as follows: 
i. Abuse of auction rules and funds from auction allotments; 
ii. Exchange rate manipulation or currency attacks; and
iii. Non-compliance with the Bank Use Promotion Act.
The Bank also advised the retailers to take note of the following: –
i. Discounts could be extended to customers in the normal course of business as long as they are reasonable and in line with best practice; and
ii. Entities using the official exchange in their pricing system may apply a tolerance premium of up to 10% in line with the operations of bureaux de change. 
<h2>Manufacturing Sector</h2>
The manufacturing sector undertook to ensure responsible pricing and to comply with the three focal areas under the SI 127 of 2020 highlighted above.
On their part, Government and the Bank pledged to continue supporting the manufacturing sector by levelling the playing field to ensure that exporters obtain a fair value of their export earnings.
<h2>CONCLUSION</h2>
All the parties underscored the need to maintain the macroeconomic stability momentum experienced in the last 12 months. The Bank, on its part, undertook to continuously monitor monetary and foreign exchange developments to ensure that the exchange rate remained stable.
</blockquote>
More: <a href="https://news.pindula.co.zw/">Pindula News</a>

Outcome Of Meeting Between RBZ And Captains Of Industry And Commerce

Economic analysts have said there is a growing mismatch between demand and supply of foreign currency on the foreign currency auction system, which means that the Reserve Bank of Zimbabwe (RBZ) bank has been allotting money that was not available.
Kenneth Mareya, an economic analyst and the Zimbabwe Independent, and  Lovemore Kadenge, past president of the Institute of Chartered Secretaries and Administrators in Zimbabwe say the system is now in arrears of about US$200 million. They added:
<blockquote>
The delays in allocating the money raise eyebrows and impact confidence in the system.
The challenges which are manifesting now are a clear sign of what many economists have been questioning on the transparency of the determination of the exchange rate since inception.
The odds are pointing to a managed exchange rate compared to the flexible one which the system is portrayed to be.
If, therefore, the country is using a managed exchange rate it requires the bank to hold some foreign currency reserves to back its currency whenever it depreciates beyond certain rates.
</blockquote>
They further argue that the sharp increase in the parallel market rate in the past few weeks which is now hovering at around US1:ZW$160 is a sign that the auction system is now leaving a wider gap of demand in foreign currency, causing demand for the greenback to spike on the parallel market.
The RBZ governor admitted that there is pressure on the demand side of the USD although his strategy is facing its own challenges perhaps due to confidence issues from participating banks and companies.
Inflation is rising as the Zimdollar continues to tumble on the parallel market against the USD. The inflation rate officially stands at <a href="https://news.pindula.co.zw/2021/07/27/zimbabwes-annual-inflation-for-july-dropped-to-less-than-60/">56.4% as of July (last month).</a> 
However, the depreciating Zimbabwean dollar and the increase in fuel prices has prompted many economists to anticipate a surge in prices in the next few weeks to come.
They say the RBZ needs to:
<ul>
<li> be more realistic on its official exchange rate as this will allow more funds to be released to pass through the formal channels. </li>
<li>revise downwards its retention for exporters to incentivise them.</li>
<li>be more vigilant on gold leakages. </li>
</ul>
More: <a href="https://www.theindependent.co.zw/2021/08/27/forex-auction-new-headache-for-rbz/">The Standard</a>

Forex Auction System: RBZ Has Been Allotting Money That's Not Available - Analysts

The Zimbabwe Asset Management Company (ZAMCO) has fully repaid the $1,2 billion loan it received from the Government to acquire non-performing loans (NPLs) from banks.
ZAMCO acquired the NPLs at a discount and restructured the loans, including by giving the debtors flexible and more time to repay, which gave the entities some breathing space, time to recover and also prevented total default on the bad loans.
Presenting the Monetary Policy Statement last week, Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya said the improvement in banks’ asset quality had been phenomenal.
Dr Mangudya said the acquisition of NPLs and their replacement with risk-free assets (treasury bonds) had provided banks with earning assets that could be used by the institutions to unlock liquidity as security. He said:
<blockquote>
ZAMCO has managed to pay off its obligations of $1,2 billion to the Government ahead of the sunset time of 2025 and plans to wind off its operations in line with section 57A of the Reserve Bank of Zimbabwe Act are underway.
</blockquote>
ZAMCO was established by the RBZ in July 2014 to deal with the systemic risk that was posed by rising NPLs in the local financial services sector.
NPLs had also resulted in banks reducing lending to productive sectors of the economy to avoid accruing more bad debts.
ZAMCO acquired most of the NPLs held by banks, which belonged to companies that were strategically important to the economy and demonstrated potential to be turned around if the constraints of costly debt were removed.
At the time, NPL levels had peaked at around 20 per cent, way above the global benchmark of 5 per cent and below.
Mangudya said the latest RBZ data shows that the average non-performing loans (NPLs) to total loans ratio has remained low at 0.55 per cent as of June 30, 2021.
More: <a href="https://www.herald.co.zw/zamco-repays-12bn-debt-to-acquire-npls/">The Herald</a>

ZAMCO Repays $1.2 Billion Loan From Government

The governor of the Reserve Bank of Zimbabwe (RBZ), Dr John Panonetsa Mangudya has disputed World Bank’s inflation projections for Zimbabwe.
In the update that reviews developments in 2019 and 2020 and emerging trends in 2021, World Bank country economist Marko Kwaramba said the bank predicted the inflation rate to fall to 86%. He said:
<blockquote>_We have observed the various policies that have been taken and the stability that has been felt, not taking into account what has been happening in the past two weeks or past week, but so far our projection for inflation is 86%._
_Inflation has been slowing as far as we have seen since up to May and we expect that in 2022 inflation will reach around 22%._</blockquote>
However, during a question-and-answer segment, Mangudya disputed the bank’s figures predicting that inflation would fall lower than the Breton Woods institution’s projections. He said:
<blockquote>_In terms of inflation, the 86% that he (Kwaramba) spoke about is quite out of our projections because as the numbers show, in May we had 162%. We expect June inflation of 105% and July to be below 55%. Why? Because of the ‘base effect._
_Our highest inflation was 837% in July 2020 and because of the base effect to suggest that we are going to be 86% by the end of the year is a bit out of projection so you may wish to reconsider the numbers, especially if you talk of July being the highest inflation, last year._
_I am not very sure which model you used as the World Bank, but it may be necessary to look at that figure. We do believe at the end of the year, December, our yearon-year inflation will be between 15% and 22%, but otherwise thank you for the presentation._</blockquote>
Defending the World Bank’s projections, the bank’s senior chief country economist Stella Ilieva said they base their projections on annual average inflation compared to the RBZ’s end-of-year inflation that does take the base effect into consideration. She said:
<blockquote>_One point on the question posed by the governor (Mangudya) on inflation is that what we show is annual average inflation. I think what the RBZ estimates are end-of-year inflation or year-on-year inflation._
_In a way, average annual inflation is affected by base effects, otherwise, we do not have significant differences in how we project monthly inflation rates._</blockquote>
The base effect relates to inflation in the corresponding period of the previous year and using a different reference for comparison can lead to a large variation in ratio or percentage comparisons between data points.
More: <a href="https://news.pindula.co.zw">Pindula News</a>; <a href="https://www.theindependent.co.zw/">The Standard</a>

Mangudya Disputes World Bank Inflation Projections For Zimbabwe

Statement by RBZ governor John Mangudya on the resolutions of the Monetary Policy Committee Meeting held on 26 March 2021.
<blockquote>The recently constituted Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe (the Bank) held its inaugural meeting on the 26th of March 2021 and deliberated on recent economic and financial developments and their implications on monetary policy.
The Committee noted the major milestones made by the Bank, especially the implementation of a monetary targeting framework, which has been successful in containing reserve money growth, and the introduction of the foreign exchange auction system which has resulted in the current stability of the exchange rate.
These policies have anchored inflation expectations, contributing to ongoing reduction in inflation, which has declined from 837.5% in July 2020 to 240% in March 2021.
Similarly, monthly inflation fell from a peak of 35.53% in July 2020 to 2.26% in March 2021.
The MPC affirmed its commitment to the implementation of sound monetary policies in order to sustain the current disinflation trajectory and ensuring a conducive macroeconomic environment for investment and growth.
The MPC made the following resolutions to buttress measures announced in the February 2021 Monetary Policy Statement and to sustain the current macroeconomic stability:
<ul>
<li>Maintaining the current conservative monetary targeting framework, anchored on 22.5% 
reserve money quarterly targets;</li>
<li>Keeping the Bank policy rate and the Medium-term Bank Accommodation (MBA) Facility rate at 40% and 30%, respectively;</li>
<li>Increasing the amount of the MBA Facility by an additional ZW$2.5 billion to cater for the winter wheat planting programme; and</li>
<li>Putting a cap on the interest rate at which banks can on-lend the proceeds from the MBA Facility at 10% above the borrowing rate to ensure recovery of the productive sectors.</li>
</ul>
The MPC encouraged bureaux de change to support Micro, Small and Medium Size Enterprises (MSMEs) which require foreign currency for their various productive requirements at levels below the minimum qualifying threshold of the SME foreign exchange auction system.
The MPC also resolved to put in place a term lending facility to assist funding needs of SMEs benchmarked on the experiences of other central banks.</blockquote>

Resolutions Of The RBZ Monetary Policy Committee Meeting {Full Statement}

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