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Eddie Cross says Zimbabwe should not dollarise

by Staff reporter
31 May 2022 at 06:35hrs | Views
TOP economist Eddie Cross Monday gave a gloomy image of Zimbabwe's battered economy but maintained dollarising it will destroy the country's re-industrialisation drive.

Speaking to Monday, Cross said although the country's inflation rate was "worryingly" on the increase, the much-preferred US dollar was not Zimbabwe's solution to its economic crisis.

"We face very considerable difficulties at the moment, and I am afraid recent actions by government have not helped," said Cross about President Emmerson Mnangagwa's decision to temporarily suspend banks' lending.

The government's measure led to huge losses by business and worsened exchange rate disparities.

"The inflation continues to grow, very worryingly, very rapidly. The parallel marketing rate continues to depreciate, it is approaching ZW$500 now.

"I do not think we should dollarise. I will go the other way. We are not going to dollarise, it is government policy and I concur with that view.

"If you go to any of our neighbouring countries such as South Africa, the Rand is used, Zambia uses its Kwacha, in Botswana they use their Pula, and in Mozambique they use the Mozambican Metical. These countries use their own currencies and do not use the United States Dollar (USD).   

"We need to use our own currency and that is the key to maintaining our productive sector. If we dollarise, we destroy our competitiveness," Cross added.

His comments will however not be well received by civil servants who have been threatening to go on industrial action if government does not award them salaries in the more table US dollar.

Their Zimbabwe dollar wages have been eroded by massive inflation, with most of them getting about ZW$19 000, an equivalent of less than US$50 at the prevailing black-market rate.

Zimbabwe's inflation stands at 244%, ahead of war-torn Ukraine and Syria; and on top of economist Steve Hanke's global rankings.

Cross said Zimbabwe's fundamentals supported the use of the Zimbabwe dollar, further referring to Finance Mthuli Ncube's surplus.

Without clarifying, he blamed the current crisis on how the country was trading its foreign currency.

Said Cross: "There is nothing wrong with the economy, the fundamentals are sound here, we have a balance payment surplus, we have a surplus in our budget accounts and there is no reason for the country to be in this situation.

"We are not trading our foreign currency properly, if we did so, Zimbabwe would be a different country quickly."

Cross, a former MDC legislator, said time was up for the old and the young should now take over reigns of the economy as has happened in other developing countries.

"A lot of change is needed in the business sector, but it is to do with the young people.

"The main change I see in the business sector is terrific, I want the young generation to take control of the economy, It is their time. My time is finished.  

"The new generation needs to stand up and take the lead. It happened in China and Rwanda and soon you will see the results." Cross said.

Source - NewZimbabwe