Biti says Mthuli Ncube did not present a supplementary budget but a brand new budget

One of the reasons why the Minister must reduce the growth rate further is that he has surrendered his authority and wisdom to the Reserve Bank, to number 80 Samora Machel Avenue, to John Panonetsa Mangudya.  Unfortunately for the Minister, Mangudya is going to lead him into total darkness.  This is what John Mangudya has done.  He has raised the rate of interest to 200%.  Madam Speaker, if you have a country such as Zimbabwe, which is prone to depressions because there is no output – I want to go back to the figures of 2020.  Our economy grew by -11.7% in 2020.  This is confirmed in the IMF’s Article IV Report of April, 2020.  The Minister himself in his letter that was leaked that he wrote to the IMF in April, 2020 actually estimated himself that the growth rate of 2020 will be -20%.  We know that it was -11.7% in 2020 and 7.3% in 2021.

If you look from 2014 to 2021, the economy has been on a downward spiral.  In fact, if you trace the history of our economy from 1960 to now, the economy has been in permanent recession mode.  If you raise rates of interest, you are discouraging economic activity in the market.  You are preventing companies from borrowing because companies depend on working capital from the banking sector.  You are preventing financial intermediation and high rates of interest also do not make sense because we have got an in duplum rule, which says that when interest capitalises and reaches 1%, it stops accumulating.  A rate of 200% does not make sense both economically and legally.  Madam Speaker Ma’am, what high rate of interest does is that it starves the economy of oxygen and it causes the economy to go into recession or depression mode.  This is exactly what is happening right now.  There is a collapse in aggregate demand, economic activity and in buoyancy.

You heard Hon. Members of Parliament saying they are being chased away from hotels, they have no money so the economy is shrinking.  It is strange Madam Speaker that in an economy which should be allowed to breath by the injection of money, the Government and its Central Bank is doing everything to squeeze the little economy that is there.  I want to say to my learned friend because he is very educated, much more educated than me that in a country such as Zimbabwe where less than 15% of the population is banked and where those that are banked are very minimum, there is over ZWL10 billion in the banking system owned by less than 12 companies such as Delta, Econet, Sakunda, Tagwirei, their cousins and so forth.  12 companies own the bulk of the money.  Where the country is under banked, your source of intervention cannot be monetary policy because Monetary Policy does not touch anyone.  We do not have money in Dotito, Chiendambuya, Tsholotsho and Nkayi, so the interventions that make sense must be supply side interventions not monetary interventions.  He has listened to John Mangudya, he is starving the economy of oxygen and he is making sure that the economy is now permanently stuck in default mode and depression mode.

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