Ncube rebases economy again

Source: Ncube rebases economy again – NewsDay Zimbabwe May 16, 2019

Veneranda Langa/Reuters

Finance minister Mthuli Ncube yesterday announced the rebasing of the economy, following the adoption of a new currency earlier this year and said growth would be slowed this year by a drought and a cyclone that hit eastern regions.

The economy grew higher than expected in 2018, Ncube told parliament.

The central bank scrapped the peg between its quasi-currency bond note and electronic dollars against the United States dollar in February and merged them into a single transitional currency called the RTGS dollar.

Rebasing the economy broadly means changing the reference points used to calculate the country’s gross domestic product.

The southern African nation rebased its economy last October, boosting it by 40% to $25,8 billion and Ncube said the adoption of the RTGS$ required another rebasing exercise, which put the economy at RTGS$70,1 billion or $21 billion at the official exchange rate.

Ncube said the economy had grown by 6,2% in 2018 compared to an initial forecast of 3,1%, but he saw growth being throttled this year by “severe economic shocks”, including a drought that has wilted crops and a cyclone that hit eastern parts of Zimbabwe in March.

He said Zimbabwe had 876 000 tonnes of maize in strategic grain reserves, enough to feed the country for seven months.

Ncube said the national treasury’s austerity measures had meant a budget surplus of RTGS$443 million was recorded in the first quarter and added that the target of a budget deficit of 5% of gross domestic product would be achieved this year.

Ncube started reading his statement late around 6pm before the House was automatically adjourned at 6:55pm as per procedure to the dismay of opposition MPs who protested and mocked him.

It was not clear whether Zanu PF legislators and Justice minister Ziyambi Ziyambi had a ploy to ensure that Ncube did not announce his full statement as Ziyambi wanted the House to debate the Companies Bill before Ncube’s statement which was severely resisted by opposition legislators.

Later, Zanu PF legislators then tried to rope in Health minister Obadiah Moyo to issue a ministerial statement on health before Ncube, but opposition MPs said the state of the economy statement was more important for the country.

Ziyambi then backed down, but Ncube had only read half of his statement before the House was automatically adjourned as per procedure.

During question and answer session and before his state of the economy address, opposition MPs heckled Ncube and called for him to resign.

He was asked by Kwekwe Central MP Masango Matambanadzo (independent) to explain government policy on pegging workers’ salaries in tandem with US$ rates because they have been eroded by inflation and price hikes.

“We now have a currency the RTGS$ and let us use that as the accounting currency to help in salary negotiations with employees because what we have noticed is that prices are beginning to go down and companies like Delta Beverages are beginning to reduce their prices because what we have seen is that the price hikes are totally unjustified,” Ncube said.

“In the last two months, the growth of money supply has been negative and we should desist from linking anybody’s salary to the US$,” he said.