Analysis of the Monetary Policy Statement for the Last Half of 2020

Introduction

The monetary policy essentially entails the use of government plan with regards to money supply and interest rates in a bid to influence the economy. This is a sister policy to the fiscal policy which is sometimes called the national budget, an instrument of resource allocation in order to ensure the achievement of important development imperatives of the country. The monetary policy reform determines the ability of the country to boost public spending on health, education, social welfare, agriculture and infrastructure without undermining fiscal sustainability. Importantly, both the fiscal and monetary policy must be strongly aligned with constitutional imperatives such that the bulk of resources and effort are dedicated towards the realization of constitutionally mandated people’s rights especially vulnerable groups such as women and persons with disabilities. It is through the monetary and fiscal policy that the government is able to adhere and fulfil its commitments to strengthen the economic position of women and persons with disabilities in order to ensure realisation of socio-economic justice of these marginalised groups. The Monetary Policy Statement presented by the Reserve Bank Governor on the 21st of August 2020 came amid the devastating impacts of COVID-19 on both the goods / real sector and the financial sector of the country as a result of a sharp decline in the economic activities in the country. The situation is further exacerbated by prevailing macroeconomic instabilities characterised by continuous depreciation of RTGS value, liquidity challenges, upsurge of parallel market exchange rates relative to official rates, foreign currency crisis characterised by acute shortages of medical drugs and equipment and low industrial capacity utilisation. In light of this, ICOD Zim conducted this monetary policy analysis with emphasis on its implication on women and persons with disabilities.

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Source: ICOD Zim