Mnangagwa ally blames cash crisis on US sanctions

PROPER banking services will return after the Zimbabwe Democracy and Economic Recovery Act (Zidera) has been removed, opening lines of credit, Finance deputy minister Terrence Mukupe said yesterday.

Zidera was passed by the United States Congress in 2001 to provide for a transition to democracy and promote economic recovery in Zimbabwe.

Responding to a question on when the cash crisis would be resolved at a currency dialogue series hosted by the Econometer Global Capital, Mukupe said there were no specific timelines.

"No one can be able to put timelines on it. I know what the problem is. You know the solutions that we are trying to put in place to address that. So for you to ask us to give you a specific time as to when this is going to happen, no one is able to do that. You saw the presentations that were being done by some of our colleagues that sanctions will be in place until elections are held. You know for a fact that as long as Zidera is there, there is no way we are going to have a proper banking system in Zimbabwe because we need those lines of credit," he said.

Section 4(2)(c) of Zidera stipulates that until the US President makes certification, the Secretary of the Treasury shall instruct the US executive director to each international financial institution to oppose and vote against any extension by the respective institution of any loan, credit or guarantee to the government of Zimbabwe; or any cancellation or reduction of indebtedness owed by the government of Zimbabwe to the US or any international financial institution.

According to Zidera, the embargo will be removed once the rule of law has been restored in Zimbabwe, including respect for ownership and title to property, freedom of speech and association, and an end to the lawlessness, violence, and intimidation sponsored condoned or tolerated by the government of Zimbabwe the ruling party, and their supporters or entities.

In his inauguration speech, President Emmerson Mnangagwa promised to arrest the ongoing cash shortages in the immediate future, adding that the liquidity challenges must be tackled head-on and dealt with as a matter of urgency, as people must be able to access their earnings as and when they need them. Mukupe said there was a ray of hope as the new administration was beginning to receive support from China, Comesa and Afreximbank, adding that the US government was engaging, albeit, with a wait-and-see attitude.

Sehliselo Mpofu, director of the macroeconomic management programme at the Macroeconomic and Financial Management Institute said Zimbabwe would perform better using its own currency.

Mpofu, however, cautioned that the Zimbabwe dollar cannot be reintroduced without addressing the economic fundamentals.

She said the way Zimbabweans were treating bond notes shows they are not confident with the government systems.

Former Zimbabwe National Chamber of Commerce president Oswell Bimha, said the central bank was warned against introducing the bond notes, as they chased away good money.

Zimbabweans have been facing a cash crisis since last year with depositors failing to access their money from banks.

The crisis has seen the emergence of cash barons, who are selling cash at a premium.

Monetary authorities, however, say the economy was facing foreign currency and not cash shortages. It said the situation would be resolved once the country exports more than it imports.