Mnangagwa limits RBZ borrowing powers amid crippling financial crisis
President Emmerson Mnangagwa has prohibited the Reserve Bank of Zimbabwe (RBZ) from borrowing foreign currency amid the surge in the crippling financial crisis in Zimbabwe.
The central bank has been accused of printing too much money leading to the devaluation of the local currency. Recently, Finance Minister Mthuli Ncube announced a cocktail of measures including lifting duty on basic commodities to try and save the Zimbabwean dollar.
But this did not stop the inflation from rising while prices of goods skyrocket in both US and Zimbabwean dollars.
According to Statutory Instrument 108 of 2023, Mnangagwa last week directed the RBZ to stop borrowing foreign currency.
“These regulations may be cited as the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act) Regulations, 2023.
“Amendment of section 7 of Cap 23:04
“The Reserve Bank of Zimbabwe Act [Chapter 22:15] (No. 5 of 1999) is amended in section 7 (“Powers of Bank”)(1) by the insertion of the following proviso to paragraph (n)- “Provided that- (i) the Bank shall only borrow foreign currency on behalf of the State at the instance of the Minister, and not on its own behalf;
“(ii) if such borrowing affects the reserve requirements of section 49(2)(a), section 49(3)(a) shall apply to the suspension of the reserve requirements;” read the notice.
Steve Hanke, a Professor of Applied Economics at The Johns Hopkins University in Baltimore, however, said the latest measures would not save Zimbabwe from the economic mess.
He estimated the country’s inflation at a shocking 1298%/year.
“Zimbabwe President Mnangagwa has ordered the central bank to stop borrowing foreign currency. This will do absolutely nothing to stop Zimbabwe’s third episode of hyperinflation in fifteen years, which started on June 12th.
“……Mnangagwa is giving a masterclass in economic stupidity and corruption. With annual inflation at a whopping 1298%/yr, he continues to try to push Zimbabweans to use the Zim dollar. He is leading Zim to ruins,” Hanke said.