In the past two weeks, the volatile Zimbabwe dollar has
suffered its worst drabbing on the black market, depreciating to US$1:$400
yesterday, after ending 2021 at US$1:$280.
Panicky authorities swung into action at the weekend,
cracking down on banks, which have been forbidden to lend, while laying out
tougher stock exchange trading measures.
Mnangagwa, who made the announcement, also suspended third
party country payments on foreign obligations in a bid to foster market
discipline within the foreign payment system, among some of the measures, which
the ZNCC said were aggravating an already dire situation.
“The chamber, its executive council and broad membership
commend the government, through the Office of the President, for responding to
a bloodbath currently taking place in the Zimbabwean economy,” the ZNCC said.
“This is refreshing to note that the man occupying the
highest office in the land is hands on. However, the downside is having the
Head of State announcing such measures sending a clear signal that politicians
are directly involved in economic policymaking, notably monetary policy
measures (where a greater degree of central bank independence is required), and
in the process rendering the Reserve Bank of Zimbabwe as an arm of political
decision making,” it said.
“This comes as a result of the government’s slow reaction
to economic chaos which triggers such a confrontational approach and in the
process, resulting in unintended consequences, that is, worsening the economic
turmoil.
“The perennial existence of arbitrage opportunities will
continue threatening economic stability, and to solve it, we need to avoid
legislating against it, but rather address its primary drivers. This can be
achieved through both market liberalisation as well as improving policy quality
and policy response to any emerging threats,” the ZNCC added.
In his announcement, Mnangagwa said government was
convinced that the recent exchange rate movements were being driven by negative
sentiments.
But ZNCC said government’s financing model for on-going
programmes and developmental projects were driving the rapid depreciation in
the local currency.
Government has been using short-term financing mechanisms
to finance the emergency road rehabilitation programme, construction of dams
and funding critical programmes.
On foreign currency withdrawal levy, the ZNCC said the
policy signifies that the “government is currently seized with revenue
collection as opposed to creating an enabling environment for business to
bloom.” Newsday
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