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Zimbabwean eonomy on free fall

06 Oct 2019 at 21:28hrs | Views
The economic meltdown has reached alarming proportions. Several factors have all combined to engender the collapse of the economy: State capture, a parasitic elite, corruption,  weekly fuel price increases, domestic currency debauchery, poor foreign currency inflows/earnings, hyperinflation and the parallel market have triggered an unprecedented collapse of the Zimbabwean economy.

Whilst the cyclical nature of economic growth is acknowledged,  it is unacceptable for authorities to look like they have surrendered everything to the market jungle. Policy paralysis and policy inconsistencies have not helped the situation. Last month(September) the RBZ released its Monetary Policy Statement in which it announced the introduction of Foreign currency denominated Savings Bonds.

Barely a month later, the RBZ has outlawed fca nostros for employees whose salaries are paid in USD.  Moreover all fca nosttos will be raided inside 30 days of deposit at the prevailing interbank market rate. This is illegal. I am sure the  RBZ may be sued. The de ja vu case is that of  a local bank which sued the RBZ and won after the RBZ had raided the bank's Fca nostro in 2008. As we in the MDC have always said, Zimbabwe cannot be an attractive investment destination with such policy ambiguities.

Other policy reversals were the freezing and unfreezing of bank accounts of the big companies that were found trading on the black market.

Recently the RBZ banned the Cash-in, Cashout and Cash back facilities but backtracked and unbanned the facilities within 2 days. These policy inconsistencies show that the economic crisis has gone beyond control. Where else have you seen fuel prices being adjusted on a weekly basis since February 2019, without consequences. Which country can you find prices of basic commodities being adjusted weekly without consequences?

To be frank, the Minister of Finance should do the honourable thing and resign because he has failed to steer the economy. His Economic Stabilization programs(or ESAPs) are a monumental failure. In fact the whole regime should resign.

Otherwise, the only solution is for the 2 interlocutors ( MDC and Zanu PF) to sit down and agree on political dialogue in order to rescue the economy, and  not to share power.

In the mean time, the market has now completely dollarized and it follows that Authorities must redollarize the economy as a back stop measure to avert further economic amagedon which will worsen the economic genocide and deepen the current macroeconomic, financial and fiscal conondrum.
---------Dr Tapiwa Mashakada is MDC Secretary for Policy and Research

Source - Dr Tapiwa Mashakada, MDC Secretary for Policy and Research
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