Mnangagwa must consider Mthuli Ncube's proposals

Mnangagwa must consider Mthuli Ncube's proposals
Published: 19 September 2018 (358 Views)
WHEN President Emmerson Mnangagwa addressed the nation yesterday, there was hope that he would give a clear strategy towards addressing the currency distortions that have left the country on an economic precipice.

The nation had expected that after new Finance minister Mthuli Ncube promised to address the currency distortions in the market, including the prospect of dumping the country's surrogate bond note currency, Mnangagwa would have gone a step further to give the much-needed confidence in the money market.

The current situation is untenable, Ncube reasoned, given the wild fluctuations on the black market were largely due to the rule of the market.

The bond note, he said, was behind the spiralling of the US$ black market rate and the market immediately responded, but in a very unpredictable way.

The US dollar rate to the bond note and the real time gross settlement rose to about 100%, triggering a wave of price changes.

Yesterday's State of the Nation Address at the official opening of the First Session of the Ninth Parliament was a perfect opportunity for Mnangagwa to ring currency changes that could address the situation.

But alas, Mnangagwa opted to ignore the current currency distortions and maintained that the country would continue with the current system, including the loathed bond note.

Mnangagwa's promise to inject $500 million into the market will not help anything if the currency distortions are not addressed.

Market speculation will remain in place, and so is the hunt for the greenback on the informal market that will continue to fuel inflation.

With the issue of currency distortions not addressed, the said $500 million may struggle to bring sanity in the foreign currency market and the money will be quite inadequate to meet the growing appetite for foreign currency by business and the public in general, particularly government itself.

His decision to defer reintroduction of the Zimbabwean dollar until the current negative economic fundamentals have been addressed is most welcome, but what the President forgot is that the bond note is the local currency in another name.

It would be better for Mnangagwa to consider his Finance minister's proposals seriously. The country does not need the bond note in its currency basket.

The reason why Mnangagwa probably needs the bond notes is because he has the powers to print them to satisfy the skyrocketing government expenditure as well as his Zanu PF party's populist policies.

Populism will not work if he is serious about addressing the prevailing currency distortions. His government should cut down on its expenditure and avoid printing bond notes to buy US$ and finance its operations.

- newsday

 0

You May Like These Videos

Comments

There are no comments.

Latest stories

Price controls, tinkering with the deck while the titanic is sinking

by Jacob Mafume, MDC National Spokesperson | 19 October 2018 | 161 Views

Man nearly killed over cooking oil

by Simbarashe Sithole | 19 October 2018 | 152 Views

Mnangagwa closing in on unscrupulous businesspeople

by Staff reporter | 19 October 2018 | 167 Views

Prophet sells congregant's vehicle

by Staff reporter | 19 October 2018 | 143 Views

Zanu-PF's Dexter Nduna confirmed Chegutu West MP

by Staff reporter | 19 October 2018 | 102 Views

Mnangagwa caps 1719 graduands

by Staff reporter | 19 October 2018 | 77 Views

ZCTU calls for resignation of Minister Gumbo

by Stephen Jakes | 19 October 2018 | 225 Views

Mnangagwa has to deliver and, urgently too

by Staff reporter | 19 October 2018 | 237 Views

Zanu-PF dictatorship, ideological dominance

by Vivid Gwede | 19 October 2018 | 158 Views

ZCTU, why spare Bulawayo council over rates hike

by Conway Tutani | 19 October 2018 | 144 Views

Motlanthe Commission risks playing into Zanu-PF agenda

by Staff reporter | 19 October 2018 | 191 Views

Councils challenged to generate own income

by Staff reporter | 19 October 2018 | 125 Views

Zimbabwe gender parity misses 50% mark, says Mohadi

by Staff reporter | 19 October 2018 | 96 Views

Zanu-PF official, sangoma jailed over pangolin scales

by Staff reporter | 19 October 2018 | 151 Views

Mliswa mocks Gender Commission

by Staff reporter | 19 October 2018 | 136 Views

Police harass senior Masvingo journalist

by Stephen Jakes | 19 October 2018 | 120 Views

Zimbabwe gold exports decline by 21%

by Staff reporter | 19 October 2018 | 142 Views

Zimbabwe drops in World Economic Forum rankings

by Staff reporter | 19 October 2018 | 150 Views

Village Inn exonerates Supa Mandiwanzira

by Staff reporter | 19 October 2018 | 115 Views

Zimbabwe army killings probe hots up

by Staff reporter | 19 October 2018 | 138 Views

Mthuli Ncube's 2% tax sparks confusion

by Staff reporter | 19 October 2018 | 122 Views

'ConCourt ruling to open floodgates of demos'

by Staff reporter | 19 October 2018 | 112 Views

'Zimbabwe diesel demand strikingly increasing'

by Staff reporter | 19 October 2018 | 100 Views

Tsvangirai estate sued

by Staff reporter | 19 October 2018 | 113 Views

Drug shortages hit Bulawayo hospitals

by Staff reporter | 19 October 2018 | 91 Views

Beitbridge outlines modernisation plan

by Staff reporter | 19 October 2018 | 86 Views

Wicknell Chivayo applies for discharge

by Staff reporter | 19 October 2018 | 68 Views

'Mangudya deserves our support'

by Staff reporter | 19 October 2018 | 57 Views

Zim man to stand trial in another twitter-related arrest

by Stephe Jakes | 19 October 2018 | 71 Views

Chamisa seeing ghosts, says army

by Staff reporter | 19 October 2018 | 198 Views

Deputy Minister demand evidence on $15 billion externalization

by Stephen Jakes | 19 October 2018 | 102 Views

Military working with police in law maintenance - Matemadanda

by Stephen Jakes | 19 October 2018 | 103 Views

Deputy minister Madiro encourages people to report incest cases

by Stephen Jakes | 19 October 2018 | 76 Views

Professor Manyureke under attack over her questions

by Sithabile Mafu | 19 October 2018 | 109 Views

Komichi demands V11 forms from ZEC

by Staff reporter | 19 October 2018 | 229 Views

Pupil misses exam after teacher's lashing

by Staff reporter | 19 October 2018 | 156 Views