GOVERNMENT has allayed fears over loss of value to the Real Time Gross Settlement (RTGS) balances at banks.
In a statement on the need for currency and economic reforms issued yesterday, the Minister of Finance and Economic Development, Professor Mthuli Ncube, said various measures were being put in place to accelerate economic reforms that are necessary to right sizing the economy.
He noted, in particular, that Government was aware of concerns surrounding the status of RTGS deposits, following the directive to separate these accounts from the nostro foreign currency accounts.
On this the minister said: “We commit to preserve the value of these (RTGS) balances on the current rate of exchange of 1 to 1, in order to protect people’s savings”.
Despite admitting earlier that market forces were resisting the parity value RTGS to the US$, he stressed the importance of restating Government’s commitment to reducing fiscal imbalances, which are the root cause of the many challenges the economy is facing. The minister acknowledged the problem of cash shortages and the proliferation of foreign exchange parallel market rates, which have a negative effect on prices.
Prof Ncube said these challenges require that Government position the economy on a strong footing by implementing reforms that include cutting on Government expenditure, working towards import parity pricing system, increasing efficiency on Government delivery systems and fast-tracking the State Owned Enterprises reforms, among a host of reforms.
“These reforms shall be accompanied by a strong and sustainable currency reform system, which will follow after the execution of the above reforms. This is necessary to ensure that any currency reform programme that the Government would put in place is effective and that it has minimum disruption to business,” he said.
In view of the need for an orderly currency reform programme that will be followed when the economic fundamentals are right to do, Prof Ncube said the country will continue to use the multi-currency system that was adopted in 2009.
He said this policy position entails that foreign exchange earners are not prejudiced of their regulatory foreign exchange receipts and that those who do not earn foreign exchange have access to foreign exchange through the banking system. Prof said in the meantime, the Reserve Bank of Zimbabwe would continue to maintain adequate resources for the import of essential commodities.
“Over and above the Nostro Deposit Protection Guarantee from Afreximbank, we are also reinforcing Nostro foreign currency accounts with a statutory instrument to guarantee that these are private deposits, and neither the Reserve Bank nor government has any access to them,” he said.
This is contrary to what he said while addressing British think-tank Chatham House on Monday.
He admitted that the country’s surrogate bond note is not equal to the United States dollar.
“The market is setting the pace. What is left for us is choreography and management of the economic fundamentals. The economy has dollarised. RTGS [real time gross settlement] balances are over $6 billion. The market is doing everything, we are going through a transition. The market has said these currencies [US dollar and bond notes] are not at par. I don’t want to argue with the market. The bond notes will, at some point, have to be demonetised and I cannot tell you (when that will be),” Ncube said.