The primary objective of the Reserve Bank of Zimbabwe’s (RBZ) long
awaited Monetary Policy Statement was to bring sanity to Zimbabwe’s chaotic
economic world, especially the madness in financial and currency market. As RBZ
Governor, Dr John Mangudya, readily admitted when he launched the policy
statement. “This is essential in order to bring sanity in the foreign currency
market whilst at the same time promoting exports, diaspora remittances and
investments for the good of our national economy,” he said.
Sadly, instead of bringing sanity and stability he has only succeeded in
mudding the muddy waters. After going through the statement it is clear that no
one in RBZ and Ministry of Finance; headed by the flamboyant and blundering
Professor Mthuli Ncube, who approved the statement; know what they are doing.
The statement confirms that insanity still rules supreme in Zimbabwe
because nothing in the statement makes any sense. Nothing!
“Denominating the existing RTGS balances, bond notes and coins in circulation
as RTGS dollars in order to establish an exchange rate between the current
monetary balances and foreign currency. The RTGS dollars thus become part of
the multi-currency system in Zimbabwe. The legal instrument to give effect to
this has been prepared,” said the statement.
It should be noted here that RTGS balances were, until now, denominated
Bond Notes, the electronic equivalent of Bond Notes and coins. The value of the
RTGS was less than the Bond Notes and Coins for various reasons including convenience
and electronic transactions were subject to the new 2% tax introduced last
October by Minister Ncube. Whilst the exchange rate to Bond Notes and coins was
3:1 to the USD the equivalent RTGS exchange rate was 4:1 or worse.
So in denominating all Bond Notes balances and cash to RTGS$ means people
have just lost out, instead of having Bond Note worth US$0.33 they now have
RTGS$ worth US$0.25!
“The RTGS dollars shall be used by all entities (including government)
and individuals in Zimbabwe for the purposes of pricing of goods and services,
record debts, accounting and settlement of domestic transactions,” we are now
told.
When Governor Mangudya was asked what is exchange rate for the RTGS$
against the USD; his reply was that the RBZ will not set a rate but would let
the market decide.
It should be remembered here that until this statement government had
recognised only the official exchange rate of 1:1 of Bond Note to USD.
So by acknowledging the unofficial exchange rate of 4:1 those with the
economic muscle will impose the exchange rate that suits them. Employers,
including government, will never adjust the workers’ wages, agreed at on the
basis of 1:1 exchange rate. Meanwhile all the goods and services will be
charging in RTGS$ using the highest exchange rate possible!
Last time, October last year, when Finance Minister suggested government
would let the Bond Note float this had caused serious financial turmoil as
people rushed to sell their Bond Notes for the more stable USD; the exchange
rate soared to as much as 10:1 and only started to come down when the Minister
withdraw his foolish statement!
It is hardly six months since Minister Ncube’s ill-advised exchange rate
comment and yet government has once again put its foot into it! Government has
just fired the starting gun of the rat race to buy USD with RTGS$. The value of
the latter will fall.
If government tries to impose price control by insisting on a stable
RTGS$ price whilst allowing the market to determine the later’s value this will
only result in shortages. Zimbabweans have been queuing for cash, fuel, bread,
etc. the queues are only going to get longer and the list of commodities is
short supply will increase.
“The Bank has arranged sufficient lines of credit to enable it to
maintain adequate foreign currency to underpin the exchange market. This is
essential to restore the purchasing power of RTGS balances through safeguarding
price stability emanating from the pass-through effects of exchange rate movements,”
said Governor Mangudya.
Zimbabwe’s chronic shortage of foreign currency is a child of the
country’s skewed balance of payment. We are importing far more than we can pay
for through our export earnings. We need to revive the country production to
reduce the volume of imports, we are now net importers of food a far cry from
our breadbasket of the region days. Creating lines of credit, dictating what
people should spend their hard earned incomes on, etc. are not going to end the
country’s foreign currency shortages and all the other economic problems.
It is laughable that Dr Mangudya should be admitting to the need to
“bring sanity to the foreign currency market” when he knows that it was the RBZ
and Ministry of Finance’s ill-advised policies that brought the insanity in the
first place. By the same token he and Minister Ncube know the recent statement
will do nothing to end the chaos and insanity in the Zimbabwe economy.
In his interview with ZimEye.com, Makomichi, who is also a business mogul said: ”I see the need to chair the national dialogue meeting and I am determined to resolve President Mnangagwa and Mr Chamisa’s differences. I am inviting the two with all respect. I want them to come to Masvingo and we will look for a suitable room so that I can have a discussion with them.
ReplyDeleteSome people are single track minded and instead of being useful to the nation they are a distraction, at best. Any dialogue in which both Zanu PF and MDC Alliance are key players will produce only one result – a way forward in which either one or both of them have a role to play. That will not help us in the short, medium or long term because any government in which Zanu PF has a role will be seen as a Zanu PF regime in all but name. Even if Zanu PF was to concede both the presidency and parliamentary majority to MDC Alliance no one will ever believe Zanu PF has given up power.
As long as Zanu PF is in power Zimbabwe will be seen as a pariah state and there will be no meaningful economic recovery. So there will be nothing to be gained in the short or medium term.
A Zanu PF government will never implement all the democratic reforms regardless how many times they promise to do so because it is not in the party’s DNA to risk losing power by holding free, fair and credible elections. So why idiots like Makomichi is still harping on and on about the need for dialogue with Zanu PF beggars belief!
Zanu PF rigged last July’s elections and we need to be decisive and firm and hold the party to democratic account on the matter – the party is illegitimate and it must step down. We all know what Makomichi is doing – he is pretending Zanu PF won the elections because admitting otherwise will mean holding Zanu PF to democratic account and he does not have the guts to do so.
After 38 years of appeasing Zanu PF idiots like Makomichi still believe that is the best course of action! How insane is that?
EU election observers confirmed in their report that Zanu PF rigged last July's elections and the only logical reason the EU did not bother punish the party with the new sanctions is because some EU members do not care that the elections were rigged. What they want is to be able to trade with Zimbabwe and have their share of the country's wealth. EU wants to join China, Russia, Israel, India and a number of other countries who have continued to trade with Zimbabwe regardless of the country's poor human rights record and the suffering masses.
ReplyDeleteCountries like Belgium have been calling for the lifting of EU sanctions for years. Since when has Belgium ever cared about the black Africans?
EU did not impose the sanctions because the believe in Mnangagwa's "sincerity in seeking a better live for Zimbabweans"! And we are to believe Mnangagwa is delivering that better live by rigging elections and beating, raping and even killing all who dare protest the rigged elections and tyrannical oppression. How idiotic is that!
Ordinarily I would not be surprised that someone like Dr John Mangudya, Professor Mthuli Ncube and many others would all agree that the Zimbabwe economy will never recover as long as nothing is done to end the rampant corrupt in the country. They know nothing is being done to end the corruption because the political ruling elite are the ones who are corrupt. They also know that the only solution is for the country to hold free, fair and credible elections. They have not only failed to lift a finger to demand free and fair elections but worse still they know that by working for the regime they are in fact playing their part in propping up this corrupt and vote rigging regime.
ReplyDeleteThey will continue to work for the regime because they are well paid for their services and they do not care that they are contributing to the nation's economic collapse and the suffering of millions of others.
There are people out there who would happily sell their own mother's for a price and boast their had a mother to sell. The tragedy for Zimbabwe is that we have more than our fair share of such people. If Mangudya or Ncube were to resign in protest that Mnangagwa rigged last year's elections - there will be one hundred thousands equally qualified Zimbabwe who would happily work for Mnangagwa even if the tyrant's hands were dripping blood of the latest victims of his shoot to kill policy! Such is level of moral decay in Zimbabwe today!