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Monetary policy review
Media Monitoring Project Zimbabwe (MMPZ)
Extracted from Weekly Media Update 2004-16
Monday April 19th - Sunday April 25th 2004

Reserve Bank governor Gideon Gono’s monetary policy review statement for the first quarter of the year provided the government-controlled media with yet another opportunity to portray him as the messiah of the country’s economic recovery.

Largely premising their analysis on the drop in inflation, these media narrowly viewed the monetary policy as the only solution to economic revival and disregarded the broader macro-economic and political environment under which the policy is being implemented.

Although the private media acknowledged that Gono’s policy had, to some extent, arrested some economic ills, they examined the policy and pointed out that it would not prevent economic collapse alone, saying that other issues, such as a return to the rule of law, had to be addressed too.

In their preview of Gono’s statement, ZBC (19 & 20/4, 8pm) and The Herald (20/4) sought to present the monetary policy as having been a resounding success. The Herald for example, noted that, "great strides have been made in addressing the country’s economic challenges following the unveiling of the new monetary policy…" The paper, and indeed ZBC, then cited the closure of asset management companies and banks and the drop in inflation to substantiate such claims.

However, they both failed to give a comprehensive analysis of the targets Gono set himself in December and what he has achieved so far.

Rather, the next day The Herald (21/4) continued to use the decline in annual inflation from 603 percent in February to 583 percent in March and the stabilisation of month-on-month inflation at about six percent to passively endorse Gono’s policies.

Said the paper: "Stabilisation of the inflation figure is testimony to the workability and effectiveness of the several policy changes brought about by the monetary policy…" Radio Zimbabwe (22/4, 1pm) even allowed Small to Medium Enterprises Development Minister Sithembiso Nyoni to claim - without any substantiation - that the policy had resulted in the creation of more jobs.

It was hardly surprising therefore that when Gono finally made his statement, the government media found themselves uncritically embracing its evaluation.

The Chronicle (22/4), for instance, quoted government media’s favourite economic commentator Jonathan Kadzura as saying the statement had shown that, "The governor is really determined to put the economy right on track in the next oncoming months".

Likewise, The Herald (22/4) noted that Gono had "set the pitch for economic recovery". Its comment, which praised government for its "fiscal discipline", stated: " …The progress has been swifter than even the most optimistic hoped, thanks to all who manage our economy pulling together in the right direction".

To give Gono’s review public approval the paper (23/4) claimed that, "several people expressed optimism on the future performance of the economy in view of the interventions taken by the central bank". Only three people were quoted.

The private media however, was more critical. For example, the Zimbabwe Independent, while highlighting some of Gono’s achievements, pointed out that inflation was still "extremely high when compared to our neighbours and major trading partners". Studio 7 (21/4) quoted MDC official Eddie Cross echoing similar views.

The Independent also questioned the RBZ’s hope of reducing inflation to 200 percent by year-end saying, contrary to claims by The Herald (22/4) and ZBC (22/4, 8pm), " there is at present too little fiscal discipline to complement his (Gono’s) measures", and pointed out that, "Several ministries have already exhausted their votes allocated last November, and given the current electoral drive it is unrealistic to expect ministers to stop spending".

The Tribune (23/4) agreed. It observed that, "three months is too short a period to measure the success of the policy" adding that "inflationary pressures are still present in the environment". It cited the recent 250 percent pay increases to civil servants and the hike in electricity charges as examples.

Moreover, the paper rebutted claims, especially by the government media, that the Zimbabwean currency was firming saying that would only make "sense if the parallel market rate of $8000 per US dollar is recognised as official".

It thus concluded that the review statement "may be over optimistic".

The Daily Mirror (21/4) was equally skeptical in its article, Will Gono reduce inflation? It noted that, "the monetary policy is not a panacea in itself to harness inflation and must be visibly complemented by government through an operating and binding framework."

Nevertheless, the private media failed to fully explain the reasons behind the decline in inflation.

The government media however, tried to do so. The Herald (21/4) pointed out that factors such as the "stability on the foreign exchange market since the inception of the auction system in January" and the "tight rein on money supply growth through firm control on liquidity support and overnight accommodation to financial institutions" had contributed to the decline in inflation.

But the paper and its stablemates were so pre-occupied with the inflation rate that they ignored other factors that will limit the success of the central bank’s policy.

This was despite the fact that ZBC (21/4, 2.30pm) quoted Gono slamming division and continuing lawlessness in the country during the live broadcast of his policy review.

Said Gono: "Land and factory capacity under-utilization, disunity among us as a nation, indiscipline and deliberate sabotage and disruption of productive land, factories, mines and tourism capacity will also undermine our efforts towards early revival of the economy".

The Zimbabwe Independent (23/4) also quoted Gono’s remarks and cited the recent seizure of Kondozi and Charleswood farms and Hippo Valley Estates as examples.

It observed that while Gono acknowledged the effects of the destruction of the productive sector his weakness remained "his proximity to the ruling party which obliges him to studiously ignore national governance issues upon which the success of his policy depends."

Although both private and government media pointed out that Gono’s new exchange rate of US$1 to Z$5,200 for Zimbabweans living abroad would add another layer to the country’s multiple exchange rates, none of them gave a clear explanation of the underlying effects such a scenario has on the economy.

The Zimbabwe Independent merely viewed the move as a devaluation disguised as attempts to entice Zimbabweans living abroad to send money home.

Meanwhile, the monetary policy review exposed Zimbabwe Tourism Authority’s exaggeration of the total number of tourists that have visited the country, in an effort to give the impression that the tourism sector, one of the country’s main foreign currency earners, was on the road to recovery.

The Zimbabwe Independent reported that in his review Gono revealed that tourist arrivals had increased to 1,089 million last year, compared to 739 284 in 2002. Two weeks ago ZTA claimed that the tourist arrivals had increased from 2,04 million in 2002 to 2,2 million last year. Zimsun boss Shingi Munyeza was quoted in The Daily Mirror (21/4) also disproving ZTA’s figures saying there has been no marked improvement in the industry over the last two years.

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