via Pressure piles on government | The Financial Gazette Ray Ndlovu 3 Apr 2014
PRESSURE is piling on ZANU-PF to tackle a cocktail of economic challenges that threaten to bring business operations and the economy to a halt. After a landslide victory in the July 31, 2013 harmonised polls and its promise of a better managed economy, the victorious ZANU-PF administration is struggling to find solutions to the economic free fall and hence continues to dither over its promises.
Civil servants are waiting in the shadows for pay increments promised to be effected this month. There has been no clear indications that the increments would materialise as the powers-that-be are pleading bankruptcy. Civil servants gobble up nearly 75 percent of government’s monthly revenue, hence the promised salary increments would further erode the State’s meagre resources.
Unable to fund the pay rise due to limited resources, government was forced to shift pay dates for the bulk of the civil servants as Treasury makes final attempts to finance its budget. Analysts fear this could create fertile conditions for a showdown between government and its employees, which might paralyse the economy. Civil servants’ unions have warned that they will not allow government to continue taking them for a joyride, after protracted wage negotiations that began at the end of last year.
Talks between government and unions representing civil servants have failed to change the material position of government workers, many of whom are wallowing in abject poverty. Sifiso Ndlovu, the chief executive officer of the Zimbabwe Teachers Association, the largest public servants’ union in the country, said they were trying to engage their employer to obtain feedback.
“We are still stagnating, but we are pressing hard for a meeting to settle the issue. Our members are angry, but we hope government representatives will find time to meet us and finalise the issue before April salaries are effected. Our worry is that time is running out,” said Ndlovu.
In the absence of any foreign direct investment, economic observers warn that it would be futile for ZANU-PF to make good on any of its election promises since the country’s economy is in free fall. In March, the economy slipped into its first phase of deflation since dollarisation in 2009 after years of hyper-inflation during the Zimbabwe dollar era.
Colls Ndlovu, an independent financial analyst, said that the country was in fact undergoing a period of disinflation instead of deflation. Disinflation refers to the process where the rate of inflation is slower than its previous level.
“Disoriented by the benefits of low inflation which are prevailing in the country, courtesy of the much-hyped about multi-currency system, observers have already begun to predict that one of the twin evils of economics (inflation) will be replaced by yet another more deadly evil, deflation. But the country is experiencing disinflation not deflation,” said Ndlovu. The slow growth is likely to be a deterrent to foreign investors who are closely watching the country’s performance.
The Zimbabwe Stock Exchange — used as a barometer to gauge investor sentiment — has been bearish, with the industrial index on a protracted downward spiral. The equities market was bearish last week, with the industrial index weakening by 3,04 points to 178,06 points following losses in several blue chip counters. Offering a slight reprieve to the markets was news of the appointment of John Mangudya to the position of Reserve Bank of Zimbabwe (RBZ) governor and a US$100 million loan extended to the country by the Africa Export-Import Bank at the weekend.
Tony Hawkins, an economist and member of the RBZ’s board, said Mangudya’s appointment faced notable restrictions as the country did not have a currency of its own.
“Mangudya is a substantial figure and well-trained with lots of experience, but the governor’s job is seriously constrained by the dollar economy. Money supply is obviously out of the bank’s control, as are interest rates. There’s very little he can do in a country that has dollarised, so the focus has to be on regulation rather than monetary controls,” said Hawkins.
COMMENTS
Tony leave the regulations alone, you know this ZANU government and their hand picked ZANU bagman from the CBZ can only make things worse.
Throw open Beit Bridge and we will not even notice that the civil servant are on strike. They contribute nothing except problems. Let them strike without pay and the governments budget problem ill be solved.
Just a thought, seeing as magarbage supports Russia’s take over of the Ukraine, perhaps Zimbabwe should have a referendum to see if they want to become part of South Africa. would be really funny if it was a big yes then what would he do!
zanu address economic problems not in a thousand years.
RBZ debts exceed its assets and it does not/cannot/ will not account for this state of affairs. How can an institution of this calibre be allowed to “regulate” the economy? It’s kleptocratic conduct pre dollarisation requires forensic scrutiny – indeed the puzzling directives issued immediately after dollarisation need to be looked at very carefully. The Lender of Last Resort cynically manipulated currency and destroyed completely and permanently trust in Zim $ and local banking system sector. Hence liquidity shortage – people rather be robbed at home than by the banks. We cannot be trusted EVER AGAIN to print our own money.
The problem is not the currency regime but the ZANU PF government regime. I plead with you Zimbabweans to show ZANU PF the door in 2018 and close it tightly after they are out. Keep them out forever and you will live in happiness evermore.
Why not new elections now? Why must we put up with a completely failed and illegitimate government. there must be a sustained call for the truth NOW! May the Lord have mercy on Zimbabwe and may He continue to expose the rot and the lie!
Elections, elections, elections. The definition of insanity is repeating the same action over and over and expecting a different result… This “government” perverted a system which was supposed to give us a voice…they used it to validate themselves via NIKUV. The carcass of the electoral system lies rotting – poisoned to death by ZANU(PF).
There is a really nasty tapeworm that infect fish and when the worm is mature it – the worm – pushes the self distract button in its host. The host becomes reckless so that it is eaten by heron, for example. The tapeworm’s eggs will then hatch in the bird’s gut and come out the other end in another pond or river where the young tapeworms can invade new fish hosts.
For 34 years Mugabe and his cronies have allowed greed and corruption to grow and thrive. Whilst the twin evils have sucked up all the economic nourishment out of the nation leaving millions starving and in abject poverty they have allowed their hosts, the ruling elite, to grow fat and arrogant. Now greed and corruption have mature and know the people of Zimbabwe are so impoverish there is really nothing left for the ruling elite to loot the twin evils have hit the self-distract button in Mugabe and his cronies. It is as if corruption and greed want the people to riot and lynch Mugabe and his cronies.
Everyone can see that Zimbabwe is broke, but corruption and greed is making Mugabe so reckless to provoke a violent response from the people. How can the nation believe the regime is broke when Mugabe splashes $ 5 million on a daughter’s wedding and live is a mansion whose grandeur and opulence has left many a beholder speechless?
Having elections does not work. They cheat. So put that thought aside. The only thing that will change this Goverment is massive civil unrest on a scale they cannot possibly control. I am talking 1million citizens mobilising in Harare. Zanu will be forced to flee. What will cause this mass mobilization is yet to be determined. I guess there may be a breaking point even for apathetic Zimbabweans.