By A Correspondent
Finance Minister Mthuli Ncube has assured that the current stability of the exchange rate, with official and parallel market rates nearly aligning, is sustainable and not a result of artificial measures.
This statement comes in response to concerns from both the public and businesses regarding the perceived shortage of the ZiG, which some believe is negatively impacting the economy.
Critics have pointed to this shortage as a factor fueling “artificial inflation,” warning that inflation could rise if more local currency is injected into the market.
In February, Zimbabwe recorded an inflation rate of 0.5%, well below the government’s target of 5%.
In an exclusive interview with The Herald, Ncube emphasized that the low inflation rate is not the result of artificial interventions. He explained:
“Inflation is what it is. The claim that there is no money circulating in the economy is linked to a tight monetary policy, which is the technical term for the approach we’re using.
At present, we have a strict policy in place to manage inflation effectively. That’s our primary objective; it’s not artificial.”
He further noted that the inflation rate is directly aligned with the available ZiG money supply, and the Reserve Bank’s tight monetary policy is necessary to manage it. Ncube also highlighted the importance of a strict fiscal policy, pointing out that uncontrolled government spending could lead to a scenario where the excess budget deficit would have to be monetized.
Ncube emphasized the complementary nature of the strict fiscal and monetary policies, noting that citizens should be content with the stability of both the exchange rate and inflation. He said:
“This is the stability we’ve managed to achieve, and it’s why the ZiG remains stable. The economy and the people have long called for a stable macroeconomic environment, and that’s exactly what we’re providing.
People should be pleased that we are fulfilling the role expected of us as economic policymakers. Stability allows for better planning, restores value to our domestic currency, and enables people to save and transact in the ZiG.”