For Zim, it’s déjà vu as the economy sinks deeper

Source: For Zim, it’s déjà vu as the economy sinks deeper – 

ON Tuesday, Zimbabweans woke up to the news that a family of six people now needed $9 000 to make ends meet as the Zimbabwe dollar continues to plummet on the parallel market, reaching levels of US$1 to 78, depending on the mode of exchange.

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Meanwhile, the average salary of a civil servant is $3 000 and even lower in the private sector where many companies have slashed wages to stay afloat during the COVID-19 lockdown.

So bad is the currency situation that the spreads of the exchange rate range from US$1:25 on the official market, while on the parallel market, it’s anything from 55 to 78. No other currency has such ridiculous spreads and this speaks to the lack of trust between the system and consumers.

Despite all attempts by the Reserve Bank of Zimbabwe to tackle the exchange rate, it has stubbornly refused to bend to its will. Government has suspended accounts of suspected currency manipulators, arrested thousands of illegal forex dealers and closed bureaux de change allegedly fanning the parallel market.

It even went as far as to suspend the transfer of shares in dual-listed companies to avoid manipulation of the exchange rate. As a result, investors are not able to transfer shares in dually listed companies such as Old Mutual, PPC and SeedCo International until mid-March next year.

So far, the “broad and bold measures to weed out some of the visible sources of currency instability” have not worked. Even central bank governor, John Mangudya, has taken to hurling insults at the illegal foreign currency dealers, equating them to the coronavirus and the exchange rate movement situation to “Sodom and Gomorrah”.

So, we are back to 2008 when prices increased by the hour. Most shops have abandoned displaying prices and simply put signs that the real prices are available at the tills. Any form of budgeting for poor Zimbabweans has gone out of the window.

For Zimbabweans, there is a sense of déjà vu: inflation jumped to 676,39% year-on-year in March, the last figure availed by the statistical agency, Zimstat. However, independent analysts put it at 934%. The recently reintroduced Zimbabwe dollar is under pressure yet again, and the authorities are rapidly running out of bluff and excuses.

The coronavirus outbreak has become the latest excuse to policy failures amid a lack of leadership and ideas at the very top of government. The economy has been experiencing its worst crisis in a decade, marked by shortages of fuel, food, medicines and foreign currency.

The fuel queues have returned with a vengeance while Mangudya railed in Parliament yesterday against “indiscipline, arbitrage and inefficiencies”.

Meanwhile, on Wednesday, Mnangagwa met with his advisers in order to come up with answers to the economic problems facing the country. We are not holding our breath.

COMMENTS

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    Dr Ace Mukadota PhD 4 months ago

    Comrade Doctor Robert Gabriel Mugabe PhD once famously said that a country could never go bankrupt – with the world’s fastest-shrinking economy and annual inflation of 231 million per cent in July 2008, it seemed as though he was determined to test his theory to the limit – Professor Steve Hanke’s HHIZ measure indicated that inflation peaked at an annual rate of 89.7 sextillion percent (89,700,000,000,000,000,000,000%) in mid-November 2008.

    How much further down can we go comrades ?