Mthuli Ncube`s first real test as Zimbabwe Finance Minister

Zimbabwe`s single biggest elephant in the room however, is the clarity on a sustainable monetary policy framework for the country going forward. The current one has clearly failed, despite government’s continued insistence of parity between the US dollar and the bond note.

Varying prices when paying for goods and services with either the US dollar, bond note or mobile payments only buttress this point. Without finality on this issue, government’s recovery efforts will be hamstrung.

Although, monetary policy frameworks are ideally the remit of the central bank, the market will be looking to Ncube’s budget statement for clues on the direction government is leaning toward.

Zimbabwe is in debt distress and the resolution of debt and arrears owed to multilateral creditors, and the Paris Club is critical. The required adjustment of Zimbabwe’s debt to make it more sustainable will be very onerous without some form of debt relief.

Following the rebasing of the country’s GDP, some analysts have warned that Zimbabwe effectively disqualified itself from the IMF’s Highly Indebted Poor Country (HIPC) debt relief option.

Nonetheless, Zimbabwe still qualifies for the IMF’s Poverty Reduction and Growth Trust (PRGT) concessional lending support.

More specifically, Treasury may pursue the Rapid Credit Facility support, which is normally a single up-front pay out for low-income countries facing urgent balance of payments needs, such as Zimbabwe is facing.

Some estimates put the figure needed by Zimbabwe to ease BoP pressure to be between $600 million to $1 billion. The budget statement will thus be instructive in understanding the route treasury will take in trying to resolve the country’s debt and arrears.

2018 has not been an easy year for consumers. They have had to withstand the worst of higher prices for essential products and services, while salaries have largely been stagnant.

While Treasury officials stress that the reform measures being undertaken entail pain and sacrifice by all, actual realities seem to show only consumers taking the pain.

Imagine a scenario where the President himself would have publicly taken a salary cut as the head of state, or visibly limiting the number of foreign trips.

Traveling to Guinea to sign a couple of MoUs hardly seems like a sacrifice nor the globetrotting by the minister himself to summits and conferences with no tangible benefits to the citizenry, the recent World Investment Forum’s session on entrepreneurship in Switzerland, being a case in point.

Mere platitudes of cost cutting in the higher echelons if government will not cut it. The sacrifice by government has to not only be real; it must be strictly adhered to.

By Perry Munzwembiri for The Source

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