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Monetary policy and economic Mayhem
Media Monitoring Project Zimbabwe (MMPZ)
Weekly Media Update 2005-41
Monday October 24^th – Sunday October 30^th 2005

THE government media’s status as unquestioning megaphones of government policies was illustrated by their timid follow-up coverage of the recent monetary policy review statement by Reserve Bank governor Gideon Gono.

All eight of their stories consisted of passive endorsement for the measures. The Herald (24/10), for example, simply hailed the introduction of floating the local dollar against foreign currencies saying analysts believed the development could be the "lasting solution" to the country’s economic woes without discussing the confusion the policy had precipitated in the market.

As a result, it did not go beyond the chaos the policy pronouncement immediately triggered as reflected in its revelations showing that some banks started quoting the local currency at between $75 000 and $100 000 against the US dollar, while others still clung to the old official rate of US$1:Z$26 000. Neither would the paper (28/10) evaluate the economic prudence of Gono’s plans to introduce a new currency in a hype-inflationary environment characterised by acute shortages of fuel.

ZBH totally ignored analysing the implications of the monetary policy. In addition, it greatly underreported the economic crunch facing the country, devoting only nine stories to the matter (ZTV two, Power FM six and Radio Zimbabwe one). The stories were tit-bits that steered clear of reporting the continued shortage of fuel in the country and the fresh wave of price increases in commodity and service delivery.

The government Press, which only carried two piecemeal reports highlighting economic decline, also avoided reporting on the galloping cost of living.

The papers’ reluctance to openly discuss the country’s economic crisis resulted in them relying on government voices in their reports. See Fig 4.

Fig 4 Voice distribution in the government Press

Nonetheless, ZBH carried 54 reports showing that inadequate funding, shortage of farming inputs and equipment, skewed government policies, and poor producer prices for farmers, among other factors, would compromise the country’s capacity to feed itself and paralyse its ability to produce for the export market. However, the reports did not reconcile this reality with Gono’s expectations that Zimbabwe should not import food next year.

Only the private media demonstrated some analytical capacity in the 17 stories (private Press, 14, and Studio 7, three) they carried on the monetary policy.

The Independent reported that the floatation of the dollar had "hit serious operational difficulties" as bank officials felt there "wasn’t enough liquidity on the market to buy foreign currency at the new high rates".

The paper also noted that banks, who had "cut their foreign currency departments or phased them out completely, were caught unawares by the new policy" and were busy reorganizing.

The Sunday Mirror reported that "uncertainty" had gripped the new system after the central bank "stepped in to stem skyrocketing exchange rates", which had threatened to send the local currency plummeting by 340% against the major currencies. Bank officials told the paper that the Reserve Bank had ordered banks to trade at rates of about Z$60 000 against the US dollar because higher rates were "unbearable for people and for government." The paper quoted analysts denouncing Gono’s intervention, saying it "defeats the whole purpose of having a market- determined exchange rate."

Studio 7 (28/10), which first reported the story, expressed similar sentiments.

Apart from this, the private Press carried 12 other stories of economic decline that included increases in the price of basic commodities and transport fares.

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