Money is Ncube’s biggest headache

Money is Ncube’s biggest headache

Source: Money is Ncube’s biggest headache – The Zimbabwe Independent September 21, 2018

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NEWLY-appointed Finance minister Mthuli Ncube entered the national political scene with a lot of verve, making very ambitious pronouncements, including the scrapping of the bond note, among other lofty proposals that initially sounded like quick-win policy ideas.

Zimind Comment

Before long, he was brought down to Mother Earth by the mind-numbing realities of a devastated economy and a broke Treasury.

It is fair to surmise that Ncube had not quite anticipated the sheer enormity of the task at hand. Rebuilding a shattered economy is no stroll in the park.

The crux of the matter is that Ncube and government may have the best economic revival ideas on paper but, if there is no capacity to finance the plans, all efforts are dead in the water.

What makes the task of reviving the economy that much harder is the brutal fact that multilateral and bilateral financiers seem reluctant to assist the country in the absence of tangible time-bound reforms.

Ncube has been mandated by President Emmerson Mnangagwa’s government to come up with a repayment plan for domestic and foreign debt as well as to secure offshore lines of credit to repay a debt stock estimated at US$18 billion.

To his credit, Mnangagwa has set stringent performance targets for cabinet ministers which include reducing the civil service wage bill, closing foreign embassies, privatising state-owned enterprises and weaning the security forces off active politics — among a litany of other deliverables.

According to a document titled Key Performance Indicators for the Government, obtained by the Zimbabwe Independent — which spells out a quantifiable measure for evaluating the success of the government in meeting objectives for delivery — the ministers must live up to the tenets of transparent and accountable governance.

The Finance chief has probably the most difficult assignment of all ministers. It is difficult to see where Zimbabwe can get the level of funding needed to turn around the fortunes of this troubled economy.

Mnangagwa and his delegation to the Forum on China-Africa Co-operation earlier this month sought a US$2,5 billion rescue package from Beijing. They came back empty handed.

China has made it clear that Zimbabwe has to implement reforms and show serious commitment to settling all loan arrears, now in the region of US$300 million.

With China reluctant to assist, where else can Zimbabwe seek financial support? Well, the United States — which controls the Bretton Woods institutions among other influential international financiers — has made it clear that Washington DC will not provide financial support anytime unless Harare embarks on far-reaching reforms.

The European Union, Russia, India and South Africa are unlikely to extend economic and budgetary support to Zimbabwe anytime soon.

Potential financiers will look at the economy’s current state of health and conclude that it is very risky to lend to Zimbabwe, which has a history of defaulting on loans.

The government appears determined to embark on a path to economic recovery, but the big elephant in the room is: where will the funding come from?

COMMENTS

WORDPRESS: 5
  • comment-avatar
    Mary Mills 2 years ago

    In 1923 when Germany suffered from hyperinflation they introduced a new currency backed by value of the land. Currently there is no value to agricultural land or land in communal areas perhaps way forward respect title deeds and issue title deeds in communal areas

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    At Cambridge University Mthuli would have learnt that if you earn a dollar you can only spend a dollar. ZANUPF has not understood this for the past 40 odd years. That is why we have the present debacle with us today.

    If Mthuli spends less than he brings into ZW govt coffers ZW will revive itself. If he spends more then good bye ZW and you can kiss you know what about its future !

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    Is Mthuli going to have the guts to tell his boss, ED, that Zim is broke & a responsible president should not be busy hiring planes for individuals to go for medical care tourism – taking the much needed monies from an empty basket? And should he dare to tell him, will the dumb & careless president listen anyway? I wish him good luck on this one.

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    Jeffrey Mpofu 2 years ago

    I understand where Ace Mukadota comes from but,in my book, the only credible solution is GOOD GOVERNANCE. It does not go further than that. Every country needs investment from within and from outside. Add an Independent Judiciary and you are almost done. Respect property rights and build investor confidence. Zim is certainly not the only country that needs investors. Zim must compete for them

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    Nyoni 2 years ago

    The reality is he is no longer in his cosy office in Switzerland Europe but in Zimbabwe Africa. A place where harsh reality meets  you head on. You either live with crooks or die . Ed simply hopes to improve the tarnished image they created by roping in innocent ministers to follow his whim then eventually push them out when the going is good , the coffers full and ripe for looting again. We all are watching Ed so beware.