Former Finance Minister Tendai Biti has said the latest policy announcements by the Ministry of Finance demonstrate a lack of leadership in Zimbabwe.
Finance Minister Mthuli Ncube announced a cocktail of measures meant to stabilise the exchange rate and macroeconomy. In a statement seen by Pindula News, Ncube announced several measures, including the exemption of all domestic sales in foreign currency from the 15% surrender requirement, the transfer of all external loans to the Government’s Treasury, further fine-tuning of the Foreign Exchange Auction System, lifting of restrictions on the importation of basic goods, and the creation of a supportive interest rate environment domestically.
However, Biti believes that failed exchange policies are the root cause of macro instability and that de-dollarization has failed. Biti suggests that Zimbabwe should dollarize and float the Zimbabwean dollar, paying civil servants and pensioners in US dollars. He also opposes the use of gold coins and gold-backed digital currencies, which he views as a means of laundering and looting.
Biti who is a senior official in the opposition Citizens Coalition for Change (CCC) opposes the removal of Export Surrender Requirements. He also argues that the assumption of RBZ debt is unconstitutional and morally reprehensible. He believes that all debt assumptions must have prior parliamentary approval and suggests replacing the Central Bank with a Currency Board. He wrote on Twitter:
The defining feature of all failed incompetent regimes is the capacity for adhocratic incoherent panicky decisions. The latest policy announcements by the Ministry of Finance are a leviathan manifestation of the crises of leadership arresting Zim.
Four measures have been announced namely 1) removal of duty on basic imports 2)assumption of RBZ debt 3)removal of Export Surrender Requirements 4) pre-announced envelope on FX auction With respect these measures will not halt the collapse of the ZWL$ nor reverse the meltdown.
We contend that the real cause of the macro instability is the failed exchange policy. De – dollarization has failed &failed in absolute terms . To achieve stability & to contain inflation regime must dollarise & float the Zim $. Civil servants & pensioners must be paid in US$
Gold coins & gold coin-backed digital currency are a zany instrument of laundering & looting. They must be scrapped immediately with our gold being used to stock up reserves. The Dutch auction system has been another means of theft & capture & must be abandoned forthwith.
Only in Dec&against our protests Mthuli Ncube scrapped duty-free imports of basic commoditie.5 months on the perennial flip-flopper reverses his decision. The challenge of adhocratic move is that it will not address inflation nor exchange rate collapse. Only dollarisation can
Furthermore, a discussion with local manufacturers was required to avoid hurting some strategic sectors of food industry.We have consistently called for removal of Export Surrender Requirements but removing same now when there so much imbalance will not help this economy
The decision to assume RBZ debt is not only unconstitutional but morally reprehensible. This RBZ has been guilty of corrosive Quasi Fiscal Activities outside parliamentary scrutiny. It’s huge debt & relationship with the opaque Afrexim Bank is odious & incestous.
All debt assumptions must have prior approval of parliament &this move is clearly unconstitutional. More than that it’s wrong to continue to saddle taxpayers with opaque Central Bank debt. This Bank is rogue&needs to be replaced by a Currency Board. Truth is this lot has failed.
A Currency Board is a monetary authority that issues notes and coins fully backed by a foreign reserve currency. It differs from a Central Bank (like RBZ) in that it does not have the authority to create money or conduct monetary policy.
Its sole focus is maintaining the exchange rate between the local currency and the reserve currency. A Currency Board is generally considered more transparent and less prone to political influence than a Central Bank.