Tuesday, May 02, 2006

Security forces usurping Bank functions

Military and security officials led by army commander General Constantine Chiwenga have taken hold of a number of functions of the Reserve Bank of Zimbabwe bearing on monetary policy, such as the determination of a viable foreign exchange policy and managing the national money supply, marginalizing RBZ Governor Gideon Gono.

Economic policy has in recent months come into the hands of the Zimbabwe National Security Council, assigned overriding powers by President Robert Mugabe under the recently launched National Economic Development Priority Program which proposed to reverse economic decline so as to achieve positive 1-2% growth this year.

The National Security Council is dominated by officers from the army, the air force, the police, and the feared Central Intelligence Organization. It has set up nine task forces to manage all economic sectors and oversee foreign exchange and monetary policy.

Gono sits on the foreign exchange and other task forces, but his influence is said to be limited under the new dispensation of a military-led command economy.

Central bank sources say General Chiwenga ordered Gono to disband among other advisory bodies his foreign exchange policy advisory board of economists, business executives and labor leaders. The sources aslo said Chiwenga ordered the central bank to print Z$60 trillion to fund pay increases to soldiers and civil servants.

Central bank sources, speaking on condition of anonymity, also expressed concern at the domination of economic policy meetings by state security agents, saying they feel intimidated and that their role in decisions has been significantly diminished...

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