Jonathan Moyo applauds Mthuli Ncube for refusing to ditch the Zimbabwe dollar

Exiled former minister Jonathan Moyo has applauded Finance Minister Mthuli Nciube for refusing to ditch the Zimbabwe dollar saying the bold decision that he had taken demonstrated that the government was willing to put its mouth where its money was.

Commenting on measures introduced by Ncube yesterday to shore up the local currency which included ordering government departments and parastatals to collect fees in local currency, Moyo said full dollarisation was out of the question.

Moyo suggested that Ncube should liberalise the exchange rate, match salaries of civil servants to those in the region, pay contractors in foreign currency or at the black market rate and order that all taxes be paid in local currency.

“The measures in the statement by Minister Ncube are an appropriate, significant and timely step in the right direction. But of course the devil is in the cooperation challenge: measures like these have the best chance of success where and when everyone in the economy and across the political divide is ready and willing to play their part!” Moyo said.

Full statement:

Well done and kudos Prof Mthuli Ncube. With your statement tonight, you have reverted to the right toolbox and demonstrated that at  least government is ready and willing to put its mouth where its money is, principally to shore up the Zim dollar, which has come under untold pressure characterised by precipitous price hikes and volatile exchange rates with the threat of shortages of basic commodities looming on the horizon. 

So, this is a commendable policy intervention by Minister Ncube.

It is encouraging that the thrust of his intervention is to beef up the local currency, and not to go the dollarisation track that some quarters are clamouring for.

Full dollarisation should indeed be out of the question, more so given that unlike in the 2008 doomsday scenario, exports have breached the USD 12 billion mark. In any case, the experience of countries like Argentina with dollarization is ugly and provides bad lessons of what not to do. It’s therefore prudent for Zimbabwe to remain a dualcurrency or multicurrency economy, while building up and strengthening the Zim dollar to become the dominant currency in due course. 

While it is always a daunting task to mend a roof with multiple leaks in the middle of a pounding and blinding storm of the kind currently battering the Zim economy, along with the welcome measures announced by Minister Ncube tonight, the basket of other or additional options could include the following: 

*For the Zim Dollar to eventually become the dominant currency, it would be wise to bite the bullet and liberalize the exchange rate sooner rather than later, such that the value of the currency must – as reasonably possible – be determined by demand and supply.

*Serious consideration should be given to benchmarking civil service salaries to the wage bills in the region if not in Sub-Saharan Africa.

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