RBZ needs to release data in full, on time

06 Mar, 2020 - 00:03 0 Views
RBZ needs to release data in full, on time

eBusiness Weekly

The Reserve Bank of Zimbabwe was hit last week by conspiracy theorists yet again when The Financial Times published a daft story claiming that growth in money supply was caused by the RBZ printing money to pay gold miners.

But, to a degree, the RBZ opens itself to those who see a conspiracy under every bed when it delays publishing up-to-date monthly statistics and could fairly easily defeat the detractors of itself, the Government and Zimbabwe in general by following strict rules on publishing information timeously.

The story of printing cash was obviously wrong. A major complaint by many Zimbabweans is that cash is quite difficult to access yet is needed by most people if for nothing else than paying bus fare. The RBZ, for good reasons, only drip feeds the market and is continually irritated by those who try and monopolise the cash in circulation to earn high premiums by converting digital money to cash or who want to stack it up in trunks to avoid taxes or other unwanted attention from the authorities.

If the RBZ had put printing presses into high gear there would be a lot more cash sloshing around, something most people know is false. In fact anyone getting a bunch of banknotes that have already been circulating usually finds at least half are old bond notes, suggesting that the quantity of similar new banknotes is as limited as the RBZ suggests.

Gold miners are difficult to please, but generally want to retain a higher percentage of their sales in foreign currency and want more access to US dollar banknotes, not the local variety.

Those not familiar with media operations often fail to recognise that all stories are written by one person, the reporter. Responsible editors will often check facts, and should check facts that could be wrong, but sometimes a story seems sufficiently minor to an editor that the proper checks are not made. Reporters can pick up rumours that are wrong, can misunderstand facts, have been known to generate stories that are false, and can convert bar speculation to God-given fact.

But this bar stool speculation probably started because the RBZ released several months of statistics in a single bunch. Many would look at just the final month of figures and then speculate, the speculations being wilder after each beer, rather than analysing trends over the months.

The best way of forcing such proper analysis is to release statistics each month for the previous month. Besides forcing more rigorous analysis this also makes it clear that change in things like money supply is a process, not a series of sudden jumps.

To see how timeous release of data is useful all that is necessary is to look at the daily interbank rates given by banks and the monthly cost of living indices given by ZimStat.

Those who follow exchange rate fluctuations note that since the opening of the interbank market there were six months of sudden steep falls, as the market caught up with a decade of messing around and pretence, followed by six months of high-level stability with the exchange rate slowly drifting down by two or three percent a month, roughly what would be expected when comparing the gap between US and Zimbabwean inflation rates.

ZimStat earns high marks for its monthly report. The arguments centre on the basket used to calculate the monthly inflation rate since ZimStat uses a basket generated by how those fairly close to the base of the urban families spend their money, rather than on how upper-class people with a taste for imported luxury alcohol, expensive Borrowdale housing and fancy German cars spend their far higher incomes.

But the ZimStat basket is far closer to the living standards of the ordinary urban majority than the contents of the trolleys wheeled out of a northern Harare suburban supermarket and, in any case, the ZimStat basket is not a secret. Anyone can get a copy.

These two excellent examples could be followed by the rest of those responsible for economic matters.

The Reserve Bank itself needs to publish its reports for each month by the middle of the next month.

That way everyone can see monthly fluctuations in totals of bank deposits, both for Zimbabwe dollars and for foreign currencies, and fluctuations in the quantity of notes and coins in circulation.

The Ministry of Finance and Economic Development should be issuing monthly figures, within a fortnight of the month end, of tax receipts, monthly recurrent spending, monthly capital spending, borrowing and the like.

Monthly current account totals for imports and exports, with main sectors listed for both, would be useful.

Deficits on the current account, or export surpluses, both have their effect on forecasts or analysis of Zimbabwe’s economic health.

What would be really a good idea if all these statistics could be released on the same day as the ZimStat inflation figures.

Along with the publishing in good time of the data the central bank and the finance ministry could also give comment pointing out if set targets were being met or explaining why a target was missed and what remedial action was being taken to get back on track.

Such openness and transparency would not do Zimbabwe a lot of good, allowing everyone to hold the economic managers to account, but would also defeat the conspiracy theorists. They would have so little to chew on.

Countries undergoing reform that issue good quality and extensive data frequently and on time usually do a lot better in sticking to their reform agenda than those who do not, if for no other reason that the economy’s managers know they are operating under bright lights, often wielded by people who are not their friends, and so make sure they can explain everything and will, in any case when taking action, be mindful that they will soon have their judgment placed under a spotlight.

It is usually better to give too much information than too little, as so many boards of directors have discovered over the decades as they watch their annual reports expand from a few tables to thick bound volumes of tables, notes and explanations.

Their shareholders become less vehement when they are told everything and start understanding the business they are backing a lot better.

On a more minor point, the RBZ could upgrade their press statements and dump the clichés. When the bank needs to correct wrong stories or shoot down daft speculation, and this it must do fairly frequently, it needs to be as sober in language as it is in dress. The culture that insists on dark business suits worn over white or very light blouses or shirts, depending on gender, and collars tied together with sober scarfs or ties, needs to be carried over into language.

Saying a piece of rubbish writing or speculation must be “treated with the contempt it deserves” is less effective than stating the article was wrong and the writer mistaken, or at worst ignorant.

Bank managers in general, and central bankers in particular, should not be showpersons.

But most important, careful, sober and timeous release of data will give the assurance we all seek that those running the bank know what they doing.

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