1. This mid-term Monetary Policy Statement comes at a time when the country is implementing a number of policy reforms to strengthening fiscal sustainability, reducing inflation and promoting a flexible exchange system and lay the foundation for sustainable private sector-led economic transformation.
2. The inflationary pressures emanate from; (i) the lagged effects of monetization of past fiscal deficits, (ii) the ongoing and necessary correction of long decades of mispricing and across the board subsidization of many goods and services including foreign currency, fuel, electricity, etc. which resulted in foreign currency shortages, spiralling parallel exchange rate premiums and speculative pricing, thus posing the risk of a costly re-dollarization of the economy.
3. To restore normalcy in the foreign currency market and stabilise the ensuing inflationary pressures, we formalised the trading of foreign currency by introducing the inter-bank foreign exchange market and licencing of bureaux de change in February 2019. Subsequent to that, Government took a deliberate and bold move of removing the multiple-currency system through Statutory Instrument (SI) 142 in June 2019.