'Economy not collapsing,' says RBZ chief

'Economy not collapsing,' says RBZ chief
Published: 02 July 2014
ZIMBABWE's economy is not anywhere near collapsing, with the liquidity challenges being experienced not as tight and gloomy as some quarters would want to potray, Reserve Bank of Zimbabwe Governor Dr John Mangudya has said.

Dr Mangudya said the banking sector was safe and sound, although five banks were struggling.

Appearing before the portfolio committee on Finance and Economic Development yesterday, Dr Mangudya said it was not all gloom for Zimbabwe, saying although the liquidity situation appeared to be tight, the deposits base was growing.

"I bring a message of hope and optimism," he said.

"This economy is not as illiquid as it is said, but what is there is that the negative perception is high. It's just like saying that in Mangudya's place there are witches and wizards and expect visitors to come to my place."

Dr Mangudya said the liquidity situation is a symptom of the underlying issue, which is perception.

"There's negative perception risk which in most cases is imagined and part of it real," he said.

"Business sentiment is low. I appeal to the market, customers and everyone to pay up. It's a vicious cycle. Let's do the right thing."

Dr Mangudya said the perception risk was a result of the country's negative perception on policies where people perceive Zimbabwe as a high risk event.

He said this may be self-hurt or self destruction by the way the country communicates its policies.

"We must speak more positively about ourselves," said Dr Mangudya.

"We are renowned for being educated, but we are so negative about ourselves and those negative perceptions lead to more negativity and that leads to lack of confidence.

"But if we were to measure it, we are not a country with very bad policies. The policies are good, but we may not be publicising them very well. We have a number of comparative advantages which we can exploit. We have good weather, the seventh wonder of the world, the Victoria Falls, and we have peace. We take these factors for granted, but to an investor they are very critical.

"If we were to put a very huge investment around the Victoria Falls and target one million arrivals and they spend $1,000 each, we would raise $1 billion and this could fund Zim-Asset."

Dr Mangudya said correcting the production capacity was the panacea to the economic challenges facing the country.

By the end of July, the RBZ would have taken over the banker to government functions from CBZ and the process is moving on well, he said.

"We have tested our internal systems and liaising with the Ministry of Finance and Economic Development and CBZ on this process," he said.

Dr Mangudya said the interbank market would be in place by the end of July after the African Export and Import Bank provided a $100 million facility to underwrite the market.

Dr Mangudya said the Reserve Bank of Zimbabwe Debt Assumption Bill which is before Parliament would determine movement on the apex bank's recapitalisation exercise.

He said government was seized with demonetisation of the Zimdollar.
- chronicle
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