RBZ Governor Mushayavanhu: Civil Service Bonuses Will Not Disrupt Economic Stability

Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu has reassured the public that forthcoming bonus payments to civil servants will not destabilize prices or exchange rates during the holiday season.

In an interview, Mushayavanhu highlighted the government’s strategic decision to pay bonuses partly in US dollars and Zimbabwe Gold (ZiG), ensuring minimal economic disruptions.

A significant portion of the bonuses will be in hard currency, with the remainder in ZiG. This approach is expected to safeguard exchange rate stability.

The RBZ Governor emphasized that the government had already accounted for these bonuses in its revenue forecasts, reducing any risk of economic instability.

Mushayavanhu also pointed to the country’s fourth-quarter revenue inflows and increased diaspora remittances as factors bolstering economic resilience during this period.

These combined measures are expected to mitigate potential exchange rate volatility, providing stability for businesses and consumers alike.

Tight monetary policies implemented earlier in the year have further contributed to this stability. Excess liquidity has been curtailed, limiting speculative foreign currency demand.

The official and parallel market exchange rates have shown significant convergence. The premium between these rates has narrowed markedly, Mushayavanhu noted.

Recent policies, such as raising the bank policy rate to 35% and increasing statutory reserves to 30%, have played a critical role in achieving this outcome.

The introduction of more flexibility in the willing-buyer, willing-seller interbank foreign exchange market has also enhanced foreign currency supply.

These policy measures have stabilized both currency and prices, creating a more predictable economic environment for stakeholders.

Mushayavanhu shared that the country’s reserves, including gold holdings, now stand at approximately US$540 million. This figure significantly exceeds the reserve money of ZiG4 billion (US$155 million).

He further stated that foreign reserves surpass total banking sector deposits, which are currently at ZiG12 billion (US$467 million). This robust reserve coverage underscores economic stability.

Mushayavanhu expressed confidence in the central bank’s ongoing monetary stance, predicting further improvements in currency stability and inflation control.

As the festive season nears, the RBZ Governor’s assurances are expected to ease concerns among Zimbabweans. Stability remains a key priority for the central bank’s economic policies.

Economic observers have noted the narrowing of the exchange rate gap as a positive development. It reflects the effectiveness of monetary policies introduced in recent months.

The government’s ability to finance civil service bonuses without destabilizing the economy signals a measured approach to fiscal and monetary management.

This strategy aligns with the RBZ’s broader goal of fostering macroeconomic stability while ensuring critical obligations like bonuses are met.

The public can access more details on Zimbabwe’s economic strategies and monetary policies through official government channels and central bank updates.