New Economic Measures, Same Confusion

April 2007 | Market Strategy

Reserve Bank of Zimbabwe (RBZ) Governor Gideon Gono gave what was billed as a major policy speech on April 26. From the first accounts of those present, Gono appeared clearly frustrated by central government's fiscal irresponsibility, and is quoted as having bemoaned its futile attempt to use price controls to control inflation, which reached 2,200% y-o-y in March, and reportedly said that RBZ no longer had any effective control over exchange rate policy. In terms of the real economy, the only data unveiled was that merchandise exports in Q107 reached USD421mn, up 23% y-o-y, but only because of higher world market prices: in volume terms shipments of minerals and tobacco in the same period were down 45% and 28%, respectively. Gono also acknowledged that Zimbabwe is facing a major food emergency this year, but said that government had negotiated the importation of 500,000 tonnes of grain, but gave no details on the source of the grain or financing arrangements.

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