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.
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.
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.” Newsday
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