One of Ncube’s first major announcements as minister was the rebasing of the economy following Zimstat’s adjustment of GDP data. The rebasing saw the size of the economy being reviewed to $25.8 billion, from $18 billion. Biti and his opposition colleagues questioned the adjustment saying, among other criticisms, the rebasing of the economy thrust Zimbabwe outside the bracket of poor countries eligible for debt relief, which the country is pursuing.
Intriguingly, the rebasing of the economy is yet another similitude between the MDC Alliance manifesto and government policy.
“To the extent that data has been compromised and to the extent that there are many aspects of the Zimbabwean economy that are shadowy in nature and unaccounted for, the MDC Alliance will, in the first six months, undertake to rebase the economy in key material respects,” reads the manifesto.
Scrapping the bond note would, without doubt, be a popular measure.
The introduction of the pseudo-currency in November 2016 was a deeply unpopular, desperate act of subterfuge by a government which refused to address the underlying causes of bank note shortages. The bond notes have not helped ease the shortages, only compounding the problem by undermining confidence and providing yet another platform for arbitrage.
A September 2018 survey by Afrobarometer found that, while 42% of the polled Zimbabweans would readily accept the return of a local currency, only 2% backed the bond note.
But de-commissioning the bond notes would be no more than a symbolic gesture prompted by a misdiagnosed problem.
As of August 2018, bond notes worth $461 million were in circulation, making up 4.71% of money supply. As a consequence, their removal would not resolve the real problem, which most analysts identify to be the stock of electronic deposits amounting to nearly $9.5 billion that are not backed by reserves.
Further, the removal of the bond notes, with nothing to replace them, would affect transactional convenience, particularly in the low-income segment of the economy, where the notes are used for everyday transactions such as payment for transport and other goods and services at the bottom of the pyramid.
“It is important, however, to note that bond notes constitute only 4.15% (at the time) of money supply and therefore the major destabilising effects relate to swirling RTGS balances and Treasury Bills, as driven by high fiscal deficits,” said the Bankers Association, weighing in on the debate.
The MDC Alliance says it recognises that in the long term, it is not sustainable for Zimbabwe to continue to use multiple currencies as legal tender. The US dollar, the party says, contributes to the economy’s high cost structures, undermining the country export competitiveness.
In the long run, an MDC Alliance government would seek to join the Common Monetary Area (CMA), widely known as the rand union, which includes South Africa, Namibia, Swaziland and Lesotho.
“The importance of this decisive decision is that it will allow Zimbabwe to use a cheaper, enforceable and convertible currency, the Rand. It will allow the devaluation of the cost structure of the Zimbabwean Economy,” the MDC Alliance says.
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