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Zimbabweans cries for US$ return

by Staff reporter
02 Jun 2020 at 09:25hrs | Views
THERE is growing pressure on the government to ditch the collapsing Zim dollar and reinstate the multi-currency system, anchored by either the United States dollar or the South African rand, to stem the country's looming economic implosion.

This comes as prices of basic consumer goods and services in the country continue to skyrocket - recording new highs by the day - largely in response to the mad foreign exchange rates obtaining on the rampant parallel market.
It also comes as a pressured  President Emmerson Mnangagwa has instructed under-fire Finance minister Mthuli

Ncube and central bank governor John Mangudya to jointly address the nation on the steps they are taking to mitigate the worsening economic rot.

Besides the long standing economic crisis - which dates back to the ruinous era of the late former president Robert Mugabe - Zimbabwe is also fighting the double whammy of the global coronavirus pandemic and the regional drought, which has left millions of people in the country facing starvation.

A large cross section of Zimbabweans who spoke to the Daily News yesterday warned that the galloping inflation and runaway prices of basic goods portend an imminent total collapse of the economy, unless authorities re-introduced the multi-currency system.

The secretary general of the Zimbabwe Congress of Trade Unions (ZCTU), Japhet Moyo, said the ongoing plunge of the Zim dollar - which was prematurely brought back by Ncube last year - against major currencies, meant that even workers were no longer able to fend for their families.

"Our resolution in the last Tripartite Negotiating Forum (TNF) as labour was for employers to start paying their employees using the US dollar with effect from 30 June 2020.
"This is because the Zim dollar has lost value and is not making any sense for workers who are confronted by soaring prices of basic commodities and services on a daily basis.

"The only way forward is to adopt the US dollar or the rand given South Africa is our major trading partner," Moyo told the Daily News.
Former Finance minister in the stability-inducing government of national unity (GNU), Tendai Biti, said bringing back the US dollar would stabilise prices and tame the current hyperinflation, now officially nearing a staggering 800 percent.

"The conditions for re-introducing the local currency were never there, and what we are seeing is the market showing the government that Statutory Instrument 142 of 2019 was a total failure and disaster.

"The only way we can get out of this disaster is by re-dollarising the economy. Re-dollarising will assist to resolve the country's major challenge, which is low production," he said.

The tough-talking Harare East MP also savaged the government for its profligacy, which he said was fuelling the country's worsening economic rot.

"The problem we are facing in Zimbabwe is not just about the currency, but also a government which spends more than it has.

"This is the major reason why the bearer cheque lost value and the multi-currency system failed. Now, the Zimbabwe dollar has also failed.

"The government spends more than it has and this results in the printing of more money to support fiscal spending, which in turn results in inflation," Biti said.

Despite showing early signs of efforts to turn around the economy, which had suffered from years of corruption and mismanagement under the disastrous rule of Mugabe, Mnangagwa and his lieutenants are now finding the going tough.

Long-suffering ordinary Zimbabweans have been hit the hardest by the Zim dollar plunge, which has triggered steep price increases of basic consumer goods.

In addition, the country is once again experiencing acute fuel shortages despite the commodity being in abundant supply worldwide.

Economists told the Daily News yesterday that time was running out for the government to stabilise the economy.

"The US dollar worked for us in 2009 and helped turn around the economy, which had literally collapsed.
"Right now we are in a similar situation, if not worse, where the local currency is losing value, prices of basic commodities are soaring beyond the reach of many and the exchange rate on the parallel market is running amok.
"So, adopting the US dollar is the only option we have because this will ensure that there is price stability.

"It will end inflation and … enhance production," renowned academic and economist, Tony Hawkins, told the Daily News.
He also warned that authorities needed to bring an end to rights abuses and abductions of critics to attract international goodwill, like what happened during the GNU era.

"In 2009, when the country adopted the US dollar, there was political cohesion in the form of the government of national unity, and there was a bit of international support.

"That was key in the stabilisation of the economy. However, right now we have no political unity.

"We are witnessing abductions and human rights violations which are further alienating the country from the international community and painting a bad picture of the country to foreign investors.
"So a stable political environment is a key factor in achieving economic stability," Hawkins pointed out.
Another veteran economist, John Robertson, said introducing the US dollar now would be a good step - which needed to be complemented by improved local production.

"Zimbabwe has become a net importer of almost every product, some of which we used to produce on our own.

"Adopting the US dollar alone will not solve the problem. We need to increase production, attract foreign currency through investment and build reserves of our own which we can use during difficult times.
"The US dollar is not just adopted as a currency, it is earned, and the only way we can earn it is if we increase production and start exporting and also attract direct foreign investment," Robertson said.
In 2009, Zimbabwe binned its then worthless dollar and introduced a multiple currency system which was anchored by the US dollar.
Despite this system having served the country well for more than a decade, Ncube rattled the markets when he ill-advisedly ended the local use of the US dollar and other currencies in June last year.

He directed that the Zim dollar be the sole legal tender in the country without addressing the root causes of its crash and subsequent decimation by hyperinflation in the run-up to the consummation of the 2009 GNU.

Source - Daily News