The Reserve Bank of Zimbabwe has announced a series of measures aimed at stabilizing the economy following its latest Monetary Policy Committee (MPC) meeting on December 3, 2024. The MPC highlighted that recent policy interventions have successfully tightened liquidity and curbed speculative behavior in the foreign exchange market, leading to a notable stabilization in both the exchange rate and inflation rates since October 2024.
According to the press statement released by the Reserve Bank, inflation has seen a significant drop from 37.2% in October to 11.7% in November 2024, largely due to a one-off depreciation of the ZiG against the US Dollar in September. Looking ahead, the MPC anticipates that inflation will continue to moderate, aligning with pre-October 2024 levels. This stabilization is supported by an increase in foreign currency inflows, which rose by 19.1% to US$11.05 billion over the past ten months compared to the previous year.
Key measures resolved by the MPC to maintain economic stability include:
• Maintaining the Bank Policy Rate at 35%, aimed at controlling inflation expectations.
• Statutory Reserve Requirements remain at 15% for savings and time deposits, and 30% for demand and call deposits for both local and foreign currency, to ensure liquidity control.
• Enhancing the Interbank Foreign Exchange Market through improving the price discovery mechanism, with a recent legislative move to allow payments of QPDs for corporate tax in a 50/50 US$: ZiG arrangement, intended to encourage foreign currency sellers in the market.
In an effort to balance liquidity tightening with economic growth, the MPC has introduced a Targeted Finance Facility (TFF) aimed at supporting the productive sector. Details on this new facility will be communicated to banks soon.
Governor Dr. John Mushayavanhu concluded the statement by affirming that the MPC will continue to monitor and adjust its policy stance in response to developments in the exchange rate and inflation, ensuring that Zimbabwe’s economy remains on a stable path amidst global economic uncertainties.
This series of actions reflects Zimbabwe’s ongoing efforts to manage its economic challenges through stringent monetary policies, aiming for a stable and growth-oriented economic environment.
