Eddie Cross showers praise on Mthuli Ncube but says he was too conservative in his 2019 budget

So where to from here?

After weeks of conjecture we had the first budget of the new Government on Thursday. The Minister was not thrown by the chaos that resulted when the MDC Members refused to respect the State President and were evicted from the House. Just what they thought they were achieving by this carefully managed manoeuvre is difficult to imagine. In the end they just looked like spoilers.

The new Minister is not a politician, he is an academic and has worked all his life in the financial sector and at various Universities. He is extremely bright and widely respected and anyone who takes him on is going to experience that. When Tendai Biti took him on in one of his early question times, he soon learned that he was a clever lawyer – but no match for Mthuli in the economic sphere.

In returning to Zimbabwe to take up this job he has made considerable personal sacrifice – as have his family who have lived outside the country for nearly two decades. I warned him on arrival that he should not underestimate the size of the hole that Mr. Mugabe had left us in and should not come to any quick decisions about what to do first. My advice was to listen to everyone for three weeks and then to slowly find his way across the river. As Deng Zhou Ping said in 1976, ‘feel the bottom of the river with your feet as you move forward’.

Being the Minister you are at the pinnacle of the Ministerial team, you control the lives and futures of everyone and you are subjected to advice from every quarter of the compass. On top of that, in his case, he has no political base and has to rely on the man who appointed him to his position for support when he has to make tough decisions – which is every day. If the support for his decisions is not clear and unequivocal, it immediately undermines his authority and control, with disastrous results. So our Minister of Finance has to be a bit of a magician.

I was a bit disappointed in the budget. I felt it was very conservative in its estimates and that we will do better than forecast. I also feel that the main cause of the present problems in the retail markets with shortages and price uncertainly was the present monetary policies of the Reserve Bank, which, in my view is based on many false assumptions and distortions. The mantra that we are trading at 1 to 1 in respect to both the false currencies – the ‘Bond’ note and the so called ‘RTGS dollar’ is just ridiculous. The Minister does not believe that but has bowed to the views of the Reserve Bank Governor, who is clearly out of his depth. The facts are there for all to see – to imagine for one minute that I could ask my bank to pay out my bank balance in real US dollars and find service, is just plain nonsense.

If I took $1000 in bond notes to the Reserve Bank and asked for real USD in return they would look at me as if I was crazy. If they did so, we would have a million people queueing outside the bank in five minutes. I was always amazed at how quickly Mr. Mugabe destroyed value and accumulated massive problems during his time as President.

He won the 2013 elections and inherited a budget that planned a surplus of US$100 million. In six months he turned that into a deficit of US$500 million. After five years of rapid growth and recovery under the GNU with low inflation and no shortages of anything and almost no restrictions – we shifted to low or negative growth, rising inflation and shortages – the hard currencies we had been using so freely under the GNU began to disappear. By 2017 hard currency had virtually vanished, the Banks were no longer paying out in real USD, inflation was beginning to surge and our accumulated debt and bank balances in various forms of false currency had reached an astonishing 115 per cent of GDP.

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