Editorial Comment: Currency chaos sign of failure

Source: Editorial Comment: Currency chaos sign of failure – The Standard June 2, 2019

Editorial Comment

The move by some government departments and state-owned enterprises to set prices in United States dollar is a reflection of the confusion that has gripped the economy as a result of the government’s ineffective fiscal policies.

According to circulars to clients from the National Railways of Zimbabwe and the Agriculture ministry, their prices are now set in US dollars, but invoices can also be settled using the prevailing interbank market rate of the day.

Although, the Finance ministry on Friday issued a statement saying it had “not approved any changes to the prevailing levels of fees and payment modalities”, the damage had already been done.

Zimbabweans are already being forced to pay for most services and goods in foreign currency, which they do not earn.

The private sector has effectively abandoned the RTGS dollar, which was introduced in February as the government dabbled with plans to introduce a local currency.

On Friday, Energy minister Fortune Chasi said the Zimbabwe Electricity Transmission and Distribution Company should accept foreign currency payments from mining companies to guarantee power supplies.

Such pronouncements would naturally send a signal that the government has lost confidence in the local currency and no one would want to use it in future.

Finance minister Mthuli Ncube was not convincing when he was challenged in Parliament last week about the currency chaos.

He firmly believes that Zimbabwe needs a currency of its own and stated that using the US dollar was not sustainable.

Ncube said western sanctions against Zimbabwe made it difficult for the country to re-dollarise.

However, critics that include former Finance minister Tendai Biti argue that the only way out of the currency crisis, which has spawned shortages of fuel, drugs and electricity is to adopt the US dollar as the main currency.

They say anything short of re-dollarisation will see the meltdown intensifying and savings being eroded once more.

What this tells us is that the government needs to urgently review its policies to stop the bleeding before it’s too late.

Ncube has to be open to ideas from outside government, which must include industry and ordinary Zimbabweans, if his intentions are to act in the public interest.

Zimbabweans dread the recurrence of the 2008 crisis where their savings were wiped but following the collapse of the local currency.

The mantra in the preceding years was that the re-introduction of a local currency would only be ideal when the economy was back on track and so far there is nothing to suggest that the revival has started.