The Reserve Bank of Zimbabwe (RBZ) has forecast that inflation will fall below 5% by December, despite challenges such as a rising import bill and fluctuations in commodity prices.
In October, consumer prices surged by 37.2%, driven largely by a sharp depreciation of the Zimbabwe Gold (ZWG) currency.
However, in an interview with the <a href="https://www.theindependent.co.zw/business-digest/article/200034711/panic-not-inflation-is-under-control-rbz">Zimbabwe Independent</a>, RBZ Deputy Governor Innocent Matshe expressed confidence that inflation will soon stabilise and return to acceptable levels. Said Matshe:
<blockquote>
So really, as an economy, we should not panic because there is this huge jump in inflation.
But what we should do is take lessons from it. Because really, in terms of the aggregate inflation, it has risen to about 7,3% and we projected that by December the inflation rate should be below 5%.
We have a huge import bill of grain because of the El Niño-induced drought. We have had a huge knock given the fall in commodity prices.
We are a commodity exporter. So, we had a huge fall in commodity prices.
</blockquote>
Matshe explained that because the Zimbabwe Gold (ZWG) currency is backed by gold, an increase in gold prices will ultimately help stabilise the currency. He said:
<blockquote>
We are not so far off. We know that there has been an uptick this month (in terms of inflation). There will be moderation next month, but there will be a fall going forward to within the 5% that we projected. So, everything is under control.
Obviously, that will have an impact, but we think that impact (will be) moderate because one of the key commodities in our reserves basket, which is gold, its price is going up.
It is actually approaching record highs if it’s not at record highs already. So, there will be a moderation.
</blockquote>
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The Reserve Bank of Zimbabwe says inflation will go below 5% by December. The rise in prices in October was mainly because of their currency losing value. The Deputy Governor believes things will improve soon. They have a big bill for importing food because of bad weather. Also, the prices of goods they sell have fallen. But, because their currency is connected to gold, if gold prices go up, their currency will be stable. They predict inflation will drop to 5% soon.

RBZ Projects Inflation To Drop Below 5% By December

Reserve Bank of Zimbabwe (RBZ) deputy governor Innocent Matshe said that the central bank is in the process of applying for an International Organisation for Standardisation (ISO) code for the Zimbabwe Gold (ZiG) currency as it moves to make the unit a stand-alone currency, reported<a href="https://www.newsday.co.zw/business/article/200027220/zim-applies-for-iso-code-for-zig"> NewsDay</a>.
ISO currency codes are three-letter alphabetic codes that represent various currencies used worldwide. These codes are essential for currency trading and international settlements.
When combined, they form the symbols and cross rates used in financial transactions. For instance, USD stands for the United States Dollar, EUR represents the Euro, and JPY denotes the Japanese Yen.
The ISO currency code for the defunct Zimbabwean dollar was ZWL.
Speaking at a breakfast meeting hosted by the Zimbabwe Economics Society in Harare on Tuesday, Matshe said:
<blockquote>
According to our economic strategy, we believed that the success of our currency, ZiG, would depend on a limited management system, maintaining a tight monetary policy stance, controlling money supply and creating demand for the domestic currency.
This would demonstrate policy consistency, build trust in ZiG and facilitate effective communication. Let me confirm that ZiG is indeed a standalone currency.
We are currently in the process of applying for an ISO code and we expect no deviation from our initial protection policies.
</blockquote>
Matshe claimed that Zimbabwe’s economy has been growing despite exchange rate fluctuations and inflation. He said:
<blockquote>
It is essential to have an affordable base currency. We cannot sustain a dual currency situation indefinitely. Zimbabwe’s economy has been growing despite past instabilities, including currency fluctuations, exchange rates and inflation. However, we need to address these issues.
</blockquote>
Matshe also pointed out that it was critical to include all sectors in currency reform, including those outside the traditional financial and banking sectors. He said:
<blockquote>
The introduction of ZiG aimed to end the instability and create a standardised currency. Without robust reforms, our economy would not have grown significantly.
We need a framework that harnesses the potential of all sectors, including those outside the traditional financial and banking sectors.
Inclusivity is crucial and we must understand that digital finance is essential for a 21st-century economy. 
We have made progress in electronic financial activities, but we need to think seriously about digitalisation.
Certainty and stability in times of crisis allow for long-term planning and investment, which is key to industrialisation.
</blockquote>
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Zimbabwe Applies For ISO Code For ZiG Currency

The Reserve Bank of Zimbabwe (RBZ) says the forex allotment backlog worth millions of dollars from the first 93 auctions has been cleared.
In an interview with NewsDay Business on the sidelines of the launch of the Zimbabwe National Chamber of Commerce (ZNCC) second edition annual State of Industry and Commerce Survey 2022 on Thursday, RBZ deputy governor Innocent Matshe, said:
<blockquote>
The backlog that we experienced… has been cleared. Now, I am not talking about delays, I am talking about the backlog.
That backlog was sterilised up to auction 93… we are now working to reduce the time to say when allotments are made, and allotments are run, and the time for the recipient of the allotment to receive money in foreign currency accounts.
I don’t want to give a figure of how much the backlog was, but it was substantial.
</blockquote>
Matshe said the applications for foreign currency on the auction have gone down from an average of US$50 million to US$10 million. He said:
<blockquote>
What companies are complaining about now is not a backlog, but a delay, and that delay is caused by the process that we go through in allocating foreign currency. It doesn’t come every day so we distribute it as it comes.
The idea is, forex is in the system, we can see it, and it is there, but we have to distribute it and that process takes time.
Now, going forward, that backlog has been cleared, we are going to work on clearing the allotments in something like 14 days.
So, you will still receive complaints about delays up to next year but that will narrow down.
</blockquote>
The RBZ established the forex auction system in June 2020 for companies to manage the allocation of foreign currency to use for productive purposes.
However, the central bank failed to allocate funds to all successful bidders timeously resulting in a huge backlog with companies having to wait months on end before receiving their allotments. | <a href="https://www.newsday.co.zw/business/article/200004736/rbz-clears-forex-allotment-backlog">NewsDay</a>

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