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Oliver Kazunga, Senior Business Reporter
THE significant increase in locally-produced goods to current levels of over 80 percent, coupled with fiscal and monetary policy support measures for 2022 is expected to reduce inflationary pressures in the economy.

Zimbabwe has recently grappled inflation pressures, the second time within two decades since scrapping a US dollar-based currency regime adopted in 2009 in February 2019.

However, Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya, said in his 2022 Monetary Policy Statement issued yesterday that the inflation had generally been on a rapid decline for most of last year, touching a low of 56 percent last July from a post-dollarisation record of 837,5 percent 12 months earlier.

He said the envisaged sustained tightened monetary policy stance will also go a long way in anchoring price spectrums in the economy.

“As a result, month-on-month inflation is expected to be reduced to below four percent in the first quarter of the year and to average below three percent in the second half of 2022,” said Dr Mangudya.

“This path is expected to reduce the country’s annual inflation rate to a range of 25-35 percent by end of December 2022.”

According to official data from the Zimbabwe National Statistics Agency (ZimStat), month-on-month inflation rate for January 2022 retreated to 5,34 percent after shedding 0,42 percentage points on the December 2021 rate of 5,76 percent.

The economy is expected to register a 5,5 percent growth this year and higher potential growth trajectories going forward, according to the Treasury.

These targets are in sync with the National Development Strategy 1 (NDS1) and Vision 2030.

As such, Dr Mangudya said the tight monetary stance will be buttressed by a strong liquidity management programme being administered jointly by the Central Bank and fiscal authorities.

“In this regard, the bank is pleased with the fiscal authorities’ efforts in managing the liquidity implications of Treasury outlays.

“Going forward, Treasury and the bank will continue to strengthen the liquidity management committee,” said Dr Mangudya.

He said surveillance activities will also be enhanced to curb malpractices and cases of breaches of the Bank Use Promotion Act, currency manipulation and abuse of the auction system by some individuals and business entities.

Recently, RBZ announced that it was investigating allegations of currency manipulation by some business entities as well as breaches of the Bank Use Promotion Act.

– @KazungaOliver.