The USD on the parallel market is currently trading at a 50 percent premium. Put differently, our local unit is 50% less valuable than the real USD.
If you compare this rate and the fundamentals I have shown above, it’s clear the worst is yet to happen and the local unit will be getting severe battering.
You can see this everywhere, from the massive rally on the ZSE not supported by any improvement in business to price increases taking place in the supermarkets.
So, what really happened?
On one hand there is a temptation by laymen to bash bond-notes. On the other, naïve folks in our midst gullibly thought bond notes would solve the cash problem.
It’s understandable, but when they were introduced, bond notes were an aspirin to a body afflicted by a dangerous virus.
Mangudya was trying a wrong solution to a wrong problem after a wrong diagnosis.
Part of the problem is that besides Mangudya and the deputy governors, the rest of the team at the Reserve Bank of Zimbabwe is essentially the same team Gono had.
Why are we back where we were ten years ago? How did we fall in the same ugly pit one more time?
Why did we not have cash problems from 2009-2013? Why did the cash problem start from the time ZANU-PF took sole control of government?
The answers must be pretty obvious from the way I have framed my questions. Simply put: left to its own devices, ZANU PF started creating money with reckless abandon.
To reflect on this let us take a step back.
Remember in 2009, all civil servants were paid $100. In fact, due to hard currency shortages, they were paid using vouchers which they redeemed at banks. That was a sign that USD reserves were thin.
At that time, civil servants were estimated at 130 000.
Over the years, both the number of civil servants and their salaries have increased in multiples. For example, President Mugabe earned $1750 in 2010.
He revealed in April 2014 that his salary had increased to $4000 per month, a more than 200% increase. In 2015, he complained that his new salary of $12000 was too little. At that point it had increased by 685%.
We also know that Minister Patrick Chinamasa budgeted for a salary increase for the President and his deputies in February 2017. At this point you should be getting the gist of my argument.
Continued next page
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