RBZ MPC encourages support of MSMEs

Sakhile Phiri (Bulawayo Correspondent)

Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe (RBZ) has encouraged bureaux de change to support Micro, Small and Medium Size Enterprises (MSMEs) that require foreign currency for their various productive requirements at levels below the minimum qualifying threshold of the SME foreign exchange auction system.

In a statement on Tuesday, the new members of the MPC revealed this in the resolutions of their inaugural meeting held in Harare on Friday. The members deliberated on recent economic and financial developments and their implications on monetary policy.

The new committee members were appointed by Finance and Economic Development Minister Professor Mthuli Ncube in February and the five are: Albert Makochekanwa, Persistence Elison Gwanyanya, Daniel Makina, Charity Jinya and Mathilda Dzumbunu.

The committee’s chairperson and RBZ Governor Dr John Mangudya said 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 percent in July 2020 to 240 percent in March 2021. Similarly, monthly inflation fell from a peak of 35.53 percent in July 2020 to 2.26 percent in March 2021,” said Dr Mangudya.

Part of the statement read that 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 resolutions to buttress measures announced in the February 2021 Monetary Policy Statement and to sustain the current macroeconomic stability.

Some of the resolutions were maintaining the current conservative monetary targeting framework, anchored on 22.5 percent reserve money quarterly targets; keeping the Bank policy rate and the Medium-term Bank Accommodation (MBA) Facility rate at 40 percent and 30 percent, respectively; increasing the amount of the MBA Facility by an additional ZW$2.5 billion to cater for the winter wheat planting programme; and putting a cap on the interest rate at which banks can on-lend the proceeds from the MBA Facility at 10 percent above the borrowing rate to ensure recovery of the productive sectors.

“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,” added the statement.

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