Zimbabwe cannot go the Zambia way to stabilise its currency because their situations are different

HON. PROF. M. NCUBE: The Hon. Senator basically asked why retailers who are using parallel rates to set their prices are not punished or disallowed as compared to money changers on the streets. Those in the shops are disallowed from using exchange rates other than the auction rate and as of this week, it is other than the willing buyer willing seller rate. In fact, we have set a variation margin of 10% either side of the willing buyer willing seller interbank rate. There are guidelines as to how pricing ought to be done.

As I said, the honey pot from deviation is deep, very juicy and sweet, so they keep breaking the law. You go after them, fine them and they break the law again. So, there is that aspect but there is a level playing field. We are not treating shoppers or retailers differently from money changers. The law applies to all. There is pari passu treatment in terms of the eyes of the law.

HON. SEN. GUMPO: My supplementary question to the Minister of Finance is how the Zambians achieved to stabilise their currency when they found themselves in this sort of situation some years back. I remember Zambians used to sell money on the streets but now they no longer use the USD but use their own local currency for transacting.

HON. PROF. M. NCUBE: I thank the Hon. Senator Gumpo for his question. Zambia was never in our situation, which is a situation where you have debt arrear, sanctions, whichever way you look at it. This is a very unique situation where you have no access to credit lines. We have a situation right now where we have paid off IMF but the IMF is not allowed by law to give Zimbabwe anything but we do not owe them. Why? Because we owe the sister institution, the World Bank something. So, Zambia was never in that situation of being shut off in terms of access to credit lines.

Therefore, it was enough for Zambians to just focus on fundamentals, get their budget deficit right, re-engineer their monetary policy in the same way we have done and do all the macro-economic actions that are taken when you have a challenge with your currency. That was enough and they are where they are now but even they are not yet there by the way as I speak, this is public knowledge so I can talk about it – they have a huge external debt which is currently under resolution.  There are many other countries that have gone through similar situations as Hon. Sen. Gumpo has explained – we have Uganda in the mid 80s; Tanzania in the mid 80s too and a lot of other countries.  All these countries had one thing in common that they were able to go back because they were in a normal situation.  They just happened to be mismanaging something but in our case, there are certain factors that we are not able to deal with.  If sanctions are put on you, you do not remove them yourself.  Someone has to remove them.  We are in a different situation and that is why we cannot easily do it like Zambia or Uganda abandon the hard currency and move to our own currency when we are unsure of the source of the hard currency.  One day we will get there but it has to be a process, otherwise as I said, you will create a situation where now everyone has to be forced to liquidate USD and only hold on to the Zimbabwean dollar.  I think that will be too soon for us to act in that way but the point is well made Madam President.

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