BY PROBLEM MASAU FINANCE minister Mthuli Ncube has said “all is well” in Zimbabwe and dismissed claims that the southern African country is in the throes of an economic crisis.
Speaking in an off-the-cuff interview with NewsDay after a post-Cabinet briefing on Tuesday, Ncube emphatically declared that Zimbabwe was not facing an economic crisis.
“What crisis? We are performing well. We have put measures in place to fight inflation, people should not panic, everything is in order, zvinhu zvese zvakarongeka (all is well),” Ncube said.
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Analysts contacted by NewsDay quickly shot down Ncube’s statement describing it as inconsistent with the prevailing situation characterised by incessant price hikes of basic goods and services while the local currency continues on a free-fall.
Some businesses are rejecting the local currency, preferring the United States dollar to hedge against a repeat of the 2008 disaster when the country docked a global record-breaking hyperinflation rate of 500 billion percent which drove many businesses into bankruptcy.
The country’s year-on-year inflation is now ranked as one of the highest in the world alongside war-torn countries such as Syria after it shot to 131% in May, up from 96% recorded in April. Late last year Syria’s inflation stood at 150%. International inflation trackers, however, belief Zimbabwe’s official 131% inflation rate is understated, placing it at 256% instead.
The unbridled inflation has prompted many to urge government to redollarise the economy to save itself from further embarrassment as the Zimbabwe dollar continues to be mauled by inflation.
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But Ncube insisted there was no reverting back to dollarisation, saying the country will face a crisis of unimaginable proportions and cash shortage if it returns to the 2009 dollarisation scenario.
“We have embraced the US dollar, but have also embraced our own currency, the Zimdollar, so there is no rejection of the US dollar. So, this is what will happen on day one if you adopt the US dollar as your currency, something very nasty will happen,” Ncube said.
“You will wipe out the entire banking sector because you will have to convert the Zimdollar balances into US dollars. The banks will have a negative balance, you will have a crisis; a cash crisis because you cannot print US dollars..‚” he explained.
He added: “The advantages of having a domestic currency circulating along (the US dollar) is that we have been able to manage the cash shortage situation which we have been through before. The economy, especially the manufacturing sector, will immediately lose its competitiveness against foreign products. We will then have to do away with monetary policy, you cannot have a country that has no monetary policy, but only has a fiscal policy.”
Ncube’s stance will, however, do little to douse growing calls for the country to abandon the local currency, with workers in the private and public sectors demanding salaries in United States dollars to make ends meet.
Analysts said Ncube was out of touch with reality.
“It is sad that Zimbabweans are waking up to an increase in prices of basic commodities everyday, but the Finance minister insists that everything is fine. They are using taxpayers’ money to finance their lifestyles and they do not know the struggles of ordinary people,” analyst Farai Gwenhure said.
Educators Union of Zimbabwe secretary-general Tapedza Zhou advised Ncube to resign over his failed economic policies.
“The most honourable thing that a minister does is to resign and accept that his economic theories have failed the whole nation, teachers included, that (is) not a crime. But this is different from a minister who has been reporting things like a surplus in a country where teachers earn five times below the poverty datum line. It is not a secret, the Finance minister has failed to address the welfare of civil servants, hence should simply step down and stop losing sleep,” Zhou said.
Killmore Musavanhu, a vendor in Graniteside industrial area in Harare, said: “It doesn’t need a professor to see that our economy is in shambles. We are now pegging our stock in US dollars because our local currency keeps on losing values.”
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