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Invoking unique solutions in the midst of peculiar problems

guest column :Kevin Tutani THE coronavirus pandemic has had a marked impact on the social, health and economic aspects of human life globally. People have been forced to be more health conscious and almost one million lives have been lost to date, including the venerable frontline healthcare workers who have been fighting the pandemic in their line of work. Countries all over the world, Zimbabwe included, have had to institute lockdowns and other statutory measures in order to contain the global pandemic. The steps taken by governments were painful but necessary. It is unfortunate that national lockdowns invariably slow down economic activity and as a result the global economy is expected to contract by 4,9% this year. A modest global economic recovery is expected next year and is predicted to be around 5,% according to the IMF. This recovery rate is not necessarily something to celebrate as risks caused by lockdowns and data regarding the full impact have not been comprehensively acknowledged. In the midst of these distressing figures, Zimbabwe’s economy is expected to contract by 7,4% according to the IMF. The government through the Finance ministry is preparing the country’s stimulus recovery package worth $18 billion. The Reserve Bank of Zimbabwe (RBZ) is also expected to introduce monetary policy tools which will complement efforts of the Finance ministry and enhance the effectiveness of public policy. A number of traditional tools are at the RBZ’s disposal which include open market operations, determining the interest rates and setting of the banking sector’s statutory reserve requirements. Some non-traditional tools can also be exploited by the central bank for maximum impact, coherence and effectiveness of public policy. The goal is to reduce the impact and level of unemployment, business divestitures and offset a possible drop in government revenue and excessive fiscal pressures which have arisen from the slowing down of the economy during the lockdown period. The problem with economic challenges is that they are far reaching and extend their implications to become social problems and political problems. This is why the government and statutory entities such as the central bank have to make exceptional focus towards economic issues facing the country. Unsolved social problems have a tendency of creating conditions which generally do not promote advancement of an economy, but its economic vulnerability. Additionally social problems become political problems and lead to unrest, the rise of third forces to manipulate the current political setting in the country and in some cases a change of government through various illegal means. In order to avert these social problems and to achieve vision 2030 as laid out by the government the central bank has to expend its resources in a way that will continually complement the Finance ministry for a holistic and impactful approach towards designing an economic recovery plan for the country. The case of Zimbabwe is unique in the sense that the country is not able to borrow

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