Industry push for monetary deal

LIVINGSTONE MARUFU

 

Pressure from business is mounting on the Reserve Bank of Zimbabwe to ease its strict monetary policy following the elections, which they claim will increase liquidity and boost sagging aggregate demand, Business Times can report.

Prior to harmonised elections held on August 23, the RBZ and the Ministry of Finance and Economic Development,  vowed the monetary and fiscal policies will remain tighter for long.

Business leaders, however, said contractionary measures were hurting the economy as companies are operating at reduced capacity.

“Now that the  elections are over, we have now turned our focus to production and  this will (only) happen when liquidity has improved. It is our hope that the authorities will address the current liquidity squeeze to improve on our capacity utilisation and aggregate demand,” the Confederation of Zimbabwe Industries president Kurai Matsheza told Business Times this week.

He said the monetary authorities must strike an equilibrium when managing liquidity, not too much tightening of liquidity and not putting excessive liquidity in the market.

The calls by Matsheza come as  a number of Zimbabwe Stock Exchange listed companies are also advocating for an improved liquidity during the post-election period.

Willdale company secretary Mavuto Munginga said the operating environment remained uncertain. He however, is hoping that liquidity will improve post election.

“The tight liquidity conditions will heighten competitiveness in the market. However, it is expected that the liquidity situation will improve post general elections,” Munginga said.

He said the tight monetary measures implemented to stabilise the economy will affect cash flow generation and operations hence there is a need to ease liquidity to keep the economy running.

The country’s biggest seed producer, Seed Co Limited company secretary Tineyi Chatiza  said the current state of Zimbabwe’s socio-economic environment is marked by the  ongoing familiar uncertainty that often precedes elections with liquidity challenges in the market expected to continue as authorities try to anchor the local currency.

“Tight liquidity management is however negatively affecting the availability of productive working capital for businesses as well as aggregate demand but we hope for an improved liquidity going forward,” he said.

Also, Ariston Holdings chairman Alexander Jongwe said the liquidity crunch has  worsened the operating environment.

“ The group continues to hope for more stable policies [liquidity management] that will improve quality of business decisions and planning,” Jongwe said.

He added: “We expect a more stable  socio-economic environment, soon after the elections, that is more conducive for business and general economic activities to thrive.”

Banks are also concerned with the liquidity squeeze  as this has increased dollarisation. The Bankers Association of Zimbabwe (BAZ) Fanwell Mutogo said liquidity management is essential, but the challenge is to find a balance to keep the economy running.  He said the banks understand the  government’s position as regards the liquidity measures which have been implemented given what was happening in the economy, however, banks  believe the current tight liquidity situation is an unintended consequence of the measures.

 

 

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