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Policy Statement - January 2013
Gideon Gono, Governor of the Reserve Bank of Zimbabwe
January 31, 2013
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We meet once
again in the context of this Monetary Policy Statement which is
issued in terms of Section 46 of the Reserve
Bank Act (Chapter 22:15), and is presented against the background
of a slowdown in economic activity, not just in Zimbabwe but the
colleagues, the deterioration in global economic conditions coupled
with constraints in the domestic economy, notably the negative effects
of sanctions, adverse weather conditions and underlying liquidity
shortages imposed constraints on the growth of the Zimbabwean economy.
1.3 As a result
of these adverse developments, significant steam has been taken
off the economic growth momentum attained between 2009 and 2011
and all signs at hand point to a very difficult 2013 if we continue
to operate on a "business as usual" mode.
1.4 The emerging
risks are heavily inclined towards the downside, thereby significantly
dimming the country's economic growth prospects. The situation
has further been compounded by perennial lingering challenges which
have remained deepseated in the economy over the past decade or
Lack of Progress
in Resolving Economic Challenges
1.5 Most of you will
recall participating in the shaping up of mymaiden Monetary Policy
Statement issued in December 2003. In that statement, I outlined
the economic challenges that we saw as affecting sustained growth
and prospects of the Zimbabwean economy at that time (please refer
to Appendix 1)
1.6 It is instructive
that these challenges have not changed much as at 1 January 2013
except in the area of politics where the country now enjoys greater
peace and tranquility than then, a product of the Inclusive Government
of the last 4 years. Admittedly, lack of progress in addressing
the bulk of these underlying challenges, is visible.
these attendant challenges, great scope still exist to leverage
on the same strengths and advantages which I pointed out in that
maiden Monetary Policy Statement in December 2003:
1.8 The strengths and
positives are outlined in Appendix 2 still remain valid today and
we should take advantage of them in order to move our economy to
emerging market status.
1.9 Turning to the present
and, on the external sector front, the Eurozone sovereign debt crisis
that has plunged the global economy into a recession has also resulted
in the dwindling of trade opportunities. These negative developments
have precipitated the volatility of international commodity prices.
Consequently, the global economic slow-down has magnified the country's
external sector vulnerabilities through declining export prices,
particularly for some primary commodities.
1.10 These adverse commodity
price developments combined with limited access to offshore lines
of credit, compound the country's external sector position
with serious ramification on the vulnerability of banks.
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