Movement for Democratic Change leader Nelson Chamisa described yesterday’s move to reintroduce the Zimbabwe dollar as the sole legal tender in the country as “guerilla economics”.
“GUERRILLA ECONOMICS & ambush currency measures are ill-advised, destructive & confidence-draining,” Chamisa tweeted.
“Zim-dollarization requires that macroeconomic fundamentals, public confidence, trust, fiscal discipline, political stability and legitimacy be in place for it to be fully sustainable.”
While yesterday’s move shocked the nation, it was not an ambush.
Finance Minister Mthuli Ncube told the nation five months ago, on 11 January, before he left for Davos, that he would introduce a local currency within months.
When pressed to give a timetable he said: “I like to believe we are close but as you can imagine currency reform sometimes has to happen by stealth because it is always very sensitive because of that balance between preservation of value which may involve speculation and distortion, that is a fine balance that we have to walk so it is not easy to pronounce a long road map with milestones. You don’t do that, you just invite speculation, and attacks and everything and positioning.”
Ncube told the live debate organised by youths in business that currency reform had actually started in October last year.
His critics, especially former Finance Minister Tendai Biti, were pushing for dollarisation which Ncube said was untenable as it was not currency reform but capitulation.
Ncube argued that with dollarisation the central bank could not carry out its monetary policy and industry could not expand. It was even difficult to attract foreign investment.
The government also liberalised the exchange rate but this appeared to be forcing the country into dollarisation with the local currency losing value so fast that the economy started self-dollarising.
In some retail shops, customers could not get “cash back” in bond notes because all they had was US dollars.
But leading industrialist Busisa Moyo said the US dollars in circulation were not enough for local transactions.
The Zimbabwe dollar which kicked off at 2.5 to the greenback in February had plunged to 10.32 to the bond note by yesterday.
Ncube said the economic fundamentals were right but the exchange rate was being driven by traders who wanted to get money out of the country.
The minister said the government was also under pressure from civil servants to pay them in US dollars because goods and services were now in US dollars which most people did not earn.
While Zimbabweans are sceptical about the move and fear a return to 2008, Mthuli Ncube and his principal Emmerson Mnangagwa, have more at stake than anyone else.
They want to be recorded in history as the people that rescued Zimbabwe from economic collapse. There are, however, too many roadblocks along the way because too many people have been benefitting from the current system and will resist any change as much as they can.
An economic recovery also spells doom for the opposition as it is banking on the government to fail so that it can rope it in in a transitional authority.
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