The MPC was pleased with the relative exchange rate and price stability obtained in the economy since June 2023. The MPC noted, with emphasis, the need to ensure that inflation expectations continued to be firmly anchored through urgent attention to any emerging risks. The MPC also noted that there was need to continue promoting solutions that were aligned with the digital space and plastic money environment that the country found itself in and , in this regard, the MPC applauded the Bank for continuing to engender financial inclusions in a market based and cash-lite driven economy.
The MPC noted that the negative impact of emerging global risks, including subdued global growth emanating from geo-economic fragmentation and the effects of tight monetary policy, high-interest rates, credit squeeze and low international commodity prices, could pose significant risks to the current stability in the domestic economy. Global growth was expected to slow down from 3.5% in 2022 to 3.0% in 2023 and to 2.9% in 2023, which is far below the historical average of 3.8%.
Considering the emerging global risks and the need to keep exchange rate and inflation expectations anchored to support economic growth, the MPC made the following resolutions :
• Interest Rates with immediate effect, the Bank Policy Rate has been reduced from 150% to 130% per annum and the Medium-term Bank Accommodation (MBA) interest rate for the productive sectors including individuals and MSMEs will be maintained at 75% per annum.
• The Reserve Bank of Zimbabwe (RBZ) says with effect from 1 November 2023, foreign currency retentions on exports shall be standardized at the level of 75% across all sectors of the economy and all special dispensations granted to some sectors of the economy shall be removed. The net effect of this measure is to increase foreign exchange resources available to the Bank and Government. This would allow the country to meet foreign exchange requirements for the settlement of national and international obligations.
• Trading Margins in order to support the continuous fine-tuning and further liberalization of the foreign exchange market, with a view to guaranteeing and safeguarding exchange rate stability, it is recommended that the limit of 10% trading margin above the interbank rate be removed.
• Zimbabwe Gold (ZiG) since its introduction as a medium of exchange on 5 October 2023, the use of ZiG has been embraced widely in the economy and its continued dual use as a value-preserving instrument and a medium of exchange in the economy will go a long way in supporting digitization, financial inclusion and the overall stability of the local currency. The MPC will remain alert to attend to any emerging risks, emanating from both the domestic and international fronts, in its commitment to ensuring stability in the exchange rate and general price levels.
• Promotion of No-Frills (Low Costs) Bank Accounts Financial Institutions are encouraged to scale up financial inclusions through opening of more no-frills (low-cost) accounts. This measure will promote more usage of banking services and financial products, including increased use of bank cards, digital financial services, and other cash-lite means of payment in the economy. In order to complement efforts to formalize the economy and to give more impetus to the use of non-cash-based means of payment in the economy, it is recommended that Government considers removing Intermediated Money Transfer Tax (IMFT) on transactions that are intermediated through plastic bank cards and other digital platforms.