Zimbabwe’s Finance Minister Mthuli Ncube knows what should be done to solve the present crisis in the country so let us let him get on with it, says economist and former Movement for Democratic Change legislator Eddie Cross.
Writing on his personal blog, Cross said former Finance Minister Patrick Chinamasa in 2009 simply lifted all controls and every filling station had fuel in 10 days.
“It was a simple thing called the market at work,” Cross said.
“But such solutions only worked because we respected the basic economic fundamentals,” he added.
“Right now the fundamentals are way out of kilter and deteriorating daily. We need to back sanity and the new Minister of Finance. He knows what needs to be done – let’s let him get on with it, it is the only way to resolve the fuel crisis.”
Cross said 2018 bears little resemblance to 2008 but it is going in that direction.
“The economic fundamentals are still OK – the economy is growing, exports are strong and we are nowhere near as far gone as we were in 2008/9,” he said.
“Nevertheless, we must, all of us, recognise that the status quo is not working and we cannot allow our little ship of State to drift any further onto the rocks that lie ahead of us.”
Cross said everyone wants to sell fuel to Zimbabwe and it can be obtained for as little as 75 cents a litre.
“The solutions are not more controls, but less and more market based influence. Back on the forecourts of the fuel industry, we are buying fuel with hard currency earned, not by the State, but by exporters taken over by the Reserve Bank at the false rate of 1:1,” he said.
“In reality this means that our fuel has quickly gone from being the most expensive in the region to being the cheapest. Demand responds to this, so we try to slap controls on foreign trucks and cars and forbid people filling containers.
“There is no shortage of fuel – everyone wants to sell us the stuff and we can land it here under free market conditions at about 75 US cents a litre, but we have to find the hard currency. “
Cross said the main problem was that the government gave control of fuel imports to a cartel and is protecting that cartel which is now holding the nation at ransom.
The government created chaos in the market when it reintroduced foreign currency accounts at the beginning of this month and effectively turned the bond note and electronic money into a currency that traded against the United States dollar.
The bond note and electronic money plummeted and prices skyrocketed.
Goods disappeared from the shelves either after being bought or being hidden by the retailers hoping for higher prices.
Ncube who initially welcomed the drop of the bond note against the US dollar saying he could not argue with the market changed his mind when the central bank insisted that the bond note was at par with the US dollar.
President Emmerson Mnangagwa is, however, quite aware of how people lost their savings in 2008/2009 and would not like a repeat of that.
“No one will lose their money,” he pledged. “Temporary pressures must not blind us to the major gains we have made and continue to make on the economic front. Let us keep our focus on things that matter and on what needs to be urgently done.”