FINANCE minister Mthuli Ncube (pictured) on Wednesday told
glum-faced Zanu PF heavyweights in a closed-door politburo meeting that the
economy is in terrible shape and he has no magic wand to rescue it overnight.
The Treasury chief was responding to questions from ruling
party leaders on his plans to revive the troubled economy.The decision to
summon him to the meeting, alongside Reserve Bank of Zimbabwe governor John
Mangudya, comes amid mounting fears among Zanu PF bigwigs that the party could
lose the 2023 general election owing to the catastrophic economic decline,
which they fear is angering the population and alienating voters.
For a long time, some party heavyweights have been
unsettled by Ncube’s economic policy thrust, which has seen inflation
ballooning to 765% amid severe exchange rate volatility. Incomes and savings
have been eroded, condemning most citizens to untold poverty.
Senior party officials have been unhappy with Ncube,
accusing him of sabotaging the party through economic mismanagement. Mangudya’s
monetary policies have also been subjected to critical scrutiny by party
leaders anxious to retain political power.
Ncube’s policies, espoused in the Transitional
Stabilisation Programme (TSP), are widely blamed by Zanu PF hardliners for the
deteriorating economy.
Criticism from the party hawks had somewhat subsided ahead
of this week’s tense meeting after Ncube received strong backing from President
Emmerson Mnangagwa, who recruited the economics professor from Europe where he
was running a consultancy firm, and deployed him as a technocrat with solutions
to fix the ailing economy.
But since coming on board as a cabinet minister, Ncube has
been tiptoeing around political landmines at every turn, having introduced
sweeping policy changes which have not improved the fortunes of a devastated
economy.
Insiders said at this week’s politburo meeting, the big
guns were once again trained on Ncube, mostly by party heavyweights who were
booted out of the government during the September 2018 cabinet reshuffle. Led
by Zanu PF secretary for administration Obert Mpofu, they unequivocally stated
that they feared the party would face difficulties in the election unless
Ncube, as head of Treasury, urgently addresses the worsening economic crisis.
However, Ncube and Mangudya reportedly told the meeting in
no uncertain terms that they possessed no magic wand to turn around the
economy.
“The main issue was that of the economy and how prices of
basic goods and services have skyrocketed so terribly since he became Finance
minister. He was mainly taken to task by politburo members who are out of
government over the state of the economy. The politburo members said they were
deeply worried that this could alienate the party from potential voters because
people are suffering,” a politburo member said.
The source said much of the criticism came from Mpofu and
former finance minister Patrick Chinamasa, who demanded answers from the
country’s two economic policy tsars.
“Most criticism came from Mpofu and Chinamasa, but all
members basically expressed concern over the way the economy was being run.
Generally, the two were being accused of working against the party. As you may
know, to us the government is subservient to the party, which is then
responsible for articulating these policies to the people. So what we have done
now is to summon some of these ministers whose policies seem to work against
Zanu PF interests,” the party official said.
“So as the Finance minister and governor, we told them that
they must fix the economy with great urgency since it’s their area of
responsibility, but they clearly stated that things have gone out of hand and
it would take a miracle for things to normalise anytime soon unless government,
as a matter of urgency, develops a strategy to fund the productive sectors of
the economy.”
He added: “Mthuli Ncube, in particular, said the economy
was going to take a long time to recover, depending on the necessary
interventions. However, he indicated that in the long run, his TSP would bear
fruit, but you could see no one was buying that narrative.”
Sources said Mangudya was taken to task over the
proliferation of illegal foreign currency traders who are being blamed for
fueling inflation.
As of yesterday, the United States dollar was trading at
ZW$80, with no sign of respite, despite several measures by the central bank
aimed at containing the situation.
However, just like Ncube, Mangudya told the meeting that
he, too, was running out of options to plug loopholes exploited by parallel
market forex dealers, having already seen a myriad of his measures coming to
naught.
“As governor, he was asked to act on the
high level of instability in the exchange rate which has
seen the local currency getting so severely corroded that salaries no longer
mean anything. Mangudya said the major problem was that we are importing
everything as a country and producing very little.
“He said, for instance, we grow wheat enough only to last
three months and import wheat for the rest of the year, hence the high prices
of bread. He told the meeting that unless government prioritised funding for
the productive sectors of the economy, there was no hope,” a politburo member
said.
“All raw materials are being imported. Mangudya stated that
he was having a hard time trying to arrest the runway inflation and was running
out of options after so many loopholes emerged as he sought to close one after
another. He said players in the forex dealings have become so skillful that by
the time they come up with a measure to control it, they would already have
plotted a new way,” the politburo source said.
The Zimbabwean dollar has continued on a free-fall on the
parallel market despite several measures by the monetary authorities in the
past two years to shore it up, including the appointment of a special taskforce
to stabilise the local unit.
Among other measures, the government in mid-2019 banned the
use of foreign currency and re-introduced the Zimdollar which had been
demonetised for more than a decade.
In March this year, Ncube announced he would introduce a
“managed float” exchange rate regime, effectively abandoning strict control of
foreign exchange by the central bank, in a series of currency reforms that have
failed so far.
The move effectively brought the US dollar back into formal
circulation, but the Zimdollar’s significant decline has gathered pace.
Zimbabwe Independent
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