Zimbabwe’s economic problems “are not technical”, South African Reserve Bank (SARB) Governor Tito Mboweni told South African MPs on Tuesday.
He said: “In other words, it is not possible for the central bank in Zimbabwe to resolve the inflation problems unless, for example, the fiscal policy position changes.”
Mboweni’s remarks about Zimbabwe followed his presentation to the parliamentary finance portfolio and select committees when he said that inflation in the Southern African Development Community region was under control and below 10% — except for one country, “whose name I will not mention”, where the inflation was running at about 1Â 700%, “which is quite something”.
He noted that in contrast there had been impressive growth in Mozambique, Botswana and Angola.
Turning to Zimbabwe, he said one of the major contributory factors to the inflation picture there was its “very large budget deficit”. The central bank there could not tame “that inflation picture”.
The general economic situation in that country “is difficult because there are major constraints on the production side of the economy” — in agriculture, mining, and manufacturing. These he referred to as “major constraints” that were not technical. “They are political in the main,” he said.
“So we keep hoping and praying that the policy makers in Zimbabwe could adopt such policy measures that will be of assistance in the central bank. The technical solutions are insufficient.”
Asked by an African National Congress MP what the SARB was doing in regard to Zimbabwe, he said that the bank had a “standby facility” for Zimbabwe. He said it was “fully secured and the central bank in Zimbabwe uses that facility from time to time when it needs to make some payments, particularly in South Africa”.
“At the end of every year it is squared off. They have never defaulted on that.”
He said further: “We have tried to engage in policy discussions with our colleagues in Zimbabwe to see what we can do collectively to help … at every turn our attempts are frustrated by other constraints. That is really what we can do … the rest [we] leave to other people.” — I-Net Bridge