GOVERNMENT has so far accrued a $1,2 billion overdraft with the Reserve Bank of Zimbabwe with the new monetary policy statement prescribing to mitigate the unintended consequences of excess government overdraft on the economy.
BY FIDELITY MHLANGA
Announcing the 2018 Monetary Policy Statement yesterday, RBZ governor John Mangudya said the accumulation of an overdraft was due to the fact that the economy was relying on internal funding, as it was starved off foreign funding unlike other countries.
“On overdraft, we are on $1,2 billion. If you go by the Act it was supposed to be $800 million,” he said.
“We have done well under the difficult circumstances . . . because we are all, but on ourselves.”
Mangudya said in line with the lending power of the bank to government as provided for in section 11(a) of the Reserve Bank Act (chapter 22:15), RBZ was putting in place measures to ensure that the lending limit to government does not exceed the regulated 20% of the previous years’ revenue of the State.
“This measure is necessary to comply with good corporate governance and to mitigate the unintended consequences of excess government overdraft on the economy,” he said.
Government has been failing to live within its means incurring budget deficits with expenditure overrunning the revenue generated.
Mangudya said the 2018 Finance Bill which awaits Senate approval would make multi pricing and refusal of plastic money illegal.
At least one billion transactions valued at $97,5 billion has been recorded by end 2017, with plastic money accounting for 96% of transactions, he said.