MDC-T Shadow Minister of Finance says Zimbabwe should adopt Rand to get out of current cash crisis

 I go to point number 9, none usage of plastic money.  This was a problem of course because everybody wanted to use cash to transact.  Because of the introduction of plastic money and debit cards, you find that queues are getting smaller and smaller in the banks.  I would go further to recommend that Government must put a Statutory Instrument compelling all retailers to put point of sale machines in their businesses; whether it is hair salon or petrol station, they must implement those point of sale machines.  There has to be a Statutory Instrument to make it legal because now it is optional.  So, it is being implemented as a cafeteria menu,

I go to the next point, which is the liberalisation of the capital account.  A lot of money was going out of the country.  A person would go out with US$10 000, US$5 000, companies would withdraw US$50 000 a day, that was a lot of money.  I think we must agree that our money market was very loose because people could take as much as they needed, that has to be monitored.  Now, what has been the respond of the Reserve Bank so far in dealing with the cash crisis?  For sure the Reserve Bank has introduced maximum limits which I referred to and also introduced restrictions on RTGS that can be transacted.  They also intent to introduce bond notes by October to ease the cash flow problem.

 The argument there is a US$200m AFREXIM Bank facility which is going to be used to provide export bonus incentives to companies that export.  In fact this money is going to be paid against exports receipts, fair and fine.  My next question is, if an exporter is given that 5% in bond notes, this money cannot be externalised so, this money is used to pay local domestic costs.  The exporter will pay the wages using the bond notes and pay electricity, water and other charges.  If I am the worker, I get those bonds, what should I do; I must buy with them because it is a legal tender. That is why other people are saying it is as good as returning the Zim dollar because it is now legal tender.  I am transacting with it in the domestic market.  Once you allow that to happen, where it does end?

The other problem is that even those export incentives are no longer legal in terms of the new Reserve Bank Act, you can ask Prof. Moyo who is a law student. We have put an Act which says we cannot indulge into quasi-fiscal operations.  If the bank is now going into the export business and so on, it is reminiscent of the previous old RBZ Act.  So we have to be very careful because it will start with an export incentive, tomorrow it will be agriculture, mining and so on.  The bank goes back again to quasi-fiscal operations which the new RBZ Act proscribes.

Moreover, the US$200 million from Afrexim Bank is an overdraft; it is not yet an approved facility.  Your question is as good as mine to say, who is empowered to borrow – is it the bank or the Treasury?  If the bank says it is going to borrow again, it is engaging in quasi-fiscal operations.  I hope we are together.

Mr. Speaker Sir, as it stands now, Government is retaining 80% of all tobacco receipts, 50% of gold, diamond, platinum, chrome and other mineral receipts to deal with the cash flow crisis.  One obvious feature that is telling about the shortages of cash is the staggered civil servants’ salaries.  The Government is not staggering civil servants’ salaries because it has a choice, no.  It is because its hands are tied.  There is simply no money to pay civil servants.  We do not know that by December, we will be talking of a very bad situation if nothing dramatic happens.

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