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Mthuli Ncube savaged, under pressure

by Staff reporter
30 May 2019 at 08:10hrs | Views
Zimbabweans are increasingly turning against under pressure Finance minister Mthuli Ncube, as the country's economy continues to die - amid high prices and shortages of basic consumer goods

Zimbabweans are fearful that the country's troubled economy is once again hurtling towards another major crisis akin to the horrific 2008 hyper-inflationary era which decimated both lives and businesses.

This comes as the prices of fuel, bread and electricity are set to shoot up again due to rising inflation and the weakening of the RTGS dollar against the much coveted United States dollar.

The RTGS dollar continues to take heavy battering against most major currencies - amid worrying indications that it may soon trade above 10 to the American unit, as the country's hard cash shortages escalate.

This comes as Zimbabwe's official inflation has hit a 10-year high of 75 percent, thereby piling more pressure on already-stressed local businesses - as commerce and industry also continue to reel from power blackouts and fuel shortages, among other ills.

As a measure of the scale of the crisis facing the country -  which has heightened calls for political dialogue between President Emmerson Mnangagwa and opposition leader Nelson Chamisa -  official inflation has now hit 75,86 percent, the highest recorded in the southern African nation since it abandoned the worthless Zimbabwe dollar in 2009.

To make matters worse for consumers, the prices of most basic consumer goods were hiked sharply twice last week alone, in response to the recent fuel price increases and the ever weakening RTGS dollar against the United States dollar.

Meanwhile, Ncube yesterday insisted that the economy has turned around "after six months" as per his promise last October, boasting the turnaround is being witnessed on the fiscal side.

Ncube made the claim in Parliament yesterday after he was asked by Parliament's Public Accounts Committee chairperson and newly-appointed MDC vice-president Tendai Biti on why the economy was in a tailspin six months after the Treasury boss promised it would improve.

"The fiscal position of the economy has been turned around in six months. We have eliminated deficits on a month-to-month basis and are recording surpluses and can now focus on how to deal with social protection issues," Ncube said.

Ncube's sentiments came after the economy has seen a quick deterioration as evidenced by a hike in the prices of basic goods and services, runaway inflation, erosion of wages and an unstable forex market, among a plethora of challenges.

But, Mutare Central legislator Innocent Gonese pressed Ncube further, asking why he was boasting of fiscal surpluses at a time when indications on the ground showed deteriorating living standards by ordinary Zimbabweans.

"The Honourable minister (Ncube) is always harping about this surplus. My question to the Honourable minister is whether it is of any real benefit to us as Zimbabwe? We look at the standard of living and cost of living for everyone, what we see is economic deterioration on a daily basis. When we also look at the capacity of Zimbabweans, one realises that the capacity has been arduously affected," Gonese said.

"When we look at wages, again one realises that they have declined in real terms. My question to the minister is whether there are any real benefits to us or is that something which is just meaningless and has no real meaning to us? Can he clarify how the people of Zimbabwe are benefitting from this surplus he is always harping about."

In his response, Ncube chronicled a list of benefits, among them the Treasury being able to spare cash to increase the salaries of its workers.

"The benefits of the surpluses are as follows: One, having surplus stops growth in money supply, which in the long run will go towards stabilising the inflation growth. Secondly, the surplus is being used to cushion civil servants in terms of higher wages. In January, we gave them a cushioning of $63 million. From April 1 to December, we again gave them $400 million towards their salaries," he said.

"We are using the surpluses for social protection programmes starting with Cyclone Idai. We have allocated $100 million towards that process, but also are using the surplus for social protection in both the rural and urban areas."

The Finance minister added that they were also supporting the health and education sectors, including importing food for drought-prone areas.

Despite these efforts, the United Nations reports that 4,4 million Zimbabweans are in dire need of food.

With the erosion of the RTGS dollar by over 100% and the unstable forex rates which currently stand at US$1:ZWL$5,08 and US$1:ZWL$8,20 for the official and parallel exchange markets, respectively, experts say the benefits of the surpluses were not having any impact.

In an interview with the State media in October 2018, Ncube said: "We need patience. We know what we are doing. What I can say to Zimbabweans is that they should give me six months (to April 2019) to see the full impact of the changes from the policies that we have pursued."

Source - FinX