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OpenHere Is What Prompted Mnangagwa To Cut Short Mangudya’s RBZ Tenure
On Thursday, President Emmerson Mnangagwa decided to retire Reserve Bank of Zimbabwe (RBZ) governor John Mangudya a month ahead of schedule. This move was aimed at providing space for his successor, John Mushayavanhu, to issue a long-awaited Monetary Policy Statement (MPS), as reported by NewsDay.
Mushayavanhu is anticipated to devise new strategies to stabilize the economy, which is grappling with surging inflation and significant depreciation of the local currency.
According to NewsDay, a source revealed that Mnangagwa found himself compelled to take action after prematurely disclosing the government’s intentions to introduce a structured currency. Said the source:
It would not have made sense to allow Mangudya to release a Monetary Policy Statement (MPS) when he will be leaving office in a month.
In addition, monetary authorities were under pressure to release the MPS after President Mnangagwa jumped the gun by announcing plans for a structured currency. The announcement caught everyone by surprise.
Next week, Mushayavanhu is set to unveil the highly anticipated Monetary Policy Statement (MPS), wherein he will delve into the structured currency—a potential long-term remedy for the woes faced by the Zimbabwe dollar.
On Thursday, Deputy Minister of Finance, Economic Development, and Investment Promotion, Kudakwashe Mnangagwa, alluded to forthcoming measures aimed at shoring up the local currency.
Posting on the Ministry’s X page, Mnangagwa advised Zimbabweans against disposing of the Zimdollar. He wrote:
We have been receiving enquiries about the surge in the exchange rate, which right now can be attributed to the anxiety and anticipation of the upcoming Monetary Policy Statement which is around the corner.
If I were to irresponsibly give unsolicited advice, I would urge Zimbabweans with their hard-earned ZWL not to hedge against it.
Government is committed to ensuring that there will be no loss of value through the introduction of currency stabilisation measures.
In a notice published in the Government Gazette yesterday, Finance, Economic Development and Investment Promotion Minister Mthuli Ncube said:
It is hereby notified that His Excellency the President has, in terms of section 14 of the Reserve Bank of Zimbabwe Act [Chapter 22:15] appointed John Mushayavanhu as the governor of the Reserve Bank of Zimbabwe for a period of five years beginning on March 28, 2024 and ending on March 27, 2029.
In December 2023, Mnangagwa appointed Mushayavanhu as Mangudya’s successor. His official start date was May 1, immediately following the end of Mangudya’s term.
Mangudya’s term was scheduled to conclude on April 30, at which point he would transition to his new role as the Chief Executive Officer of the Mutapa Investment Fund on May 1.
Mushayavanhu faces the formidable challenge of halting the Zimdollar’s rapid depreciation. Over the past three months, it has plummeted by more than 250%, and last year alone, the local currency depreciated by a staggering 700%.
Despite previous efforts, the government’s measures to stabilize the local currency have proven ineffective.
Back in 2022, when the government introduced gold coins to absorb excess local currency, the Zim dollar was trading at a rate of US$1 to ZWL$2,000 on the parallel market.
By yesterday, March 28, 2024, the parallel market rate had surged to ZWL$30,000 per US$1.
The depreciation of the currency has driven up prices, resulting in annual inflation skyrocketing to 55.3% in March from 47.62% in February.
Interestingly, inflation has continued to rise even though more than 80% of transactions now occur in United States dollars.
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