‘Economy is in safe hands’

30 Jun, 2019 - 00:06 0 Views
‘Economy is in safe hands’

The Sunday Mail

There is a desperate narrative which continues to be pushed by armchair critics and doomsday commentators that Government is clueless and groping in the dark when it comes to putting the economy back on the rails.

The recent tumult in the market, where prices of goods and services continued to trek the runaway parallel market exchange rates, persuasively played to this narrative.

It, however, drowned out pronouncements from both fiscal and monetary authorities that Government in fact has a credible plan to deal with the current challenges, which are symptoms of the indiscipline of the old Zimbabwe.

Earlier this month, when Finance and Economic Development Minister Professor Mthuli Ncube told the market that goods and services will begin to fall next month, he was unsurprisingly ridiculed for days on end.

But this fact began sinking in last week when prices of goods and services began dropping as the parallel market exchange rate was somewhat tamed by the adoption of a mono-currency.

As the Reserve Bank of Zimbabwe (RBZ) mops up liquidity from the market, pressure would continue for the exchange rate to continue falling and by extension then the prices.

It has to be understood that the adoption of a local currency regime ultimately gives monetary authorities the ability to carry out open market operations to determine liquidity in the market.

In essence, it gives the apex bank enough of an arsenal to step in whenever it detects  aberrations in the market.

This was not possible during the multi-currency system,.

But Government now has an array of fiscal and monetary instruments to control the market.

Again, it is important to note, as Prof Ncube has been stressing ad infinitum, that the latest measures to introduce a new currency is part of a continuum of policies encapsulated in the Transitional Stabilisation Programme (TSP), whose objective is glibly to stabilise the economy.

Few people questioned why Treasury prescribed the policy for implementation over 18 months. It is a marathon, and not a sprint. Placing the economy over an even keel will position the country for the much-needed take off.

While there was cheer in the market as prices of goods and services tumbled, there continues to be cautiously optimism as sceptics continue stoking fears that parallel market exchange rates would rebound again.

Obviously such fears are not unfounded. It has happened before.

But it is hard to see this happening under the obtaining mono-currency regime, which is beginning to take root. Many are definitely oblivious of the fact that the RBZ, in support of the fiscal measures by Treasury, has allowed the interbank rate to freely float.

By yesterday, it had climbed to 1:8, which is close to parity, and in some instances more than the parallel market rate. When, not if, the market increasingly gains confidence in the new regime, the market will become more active, which is most likely to stabilise the rate.

It has to be remembered that there is close to US$1 billion that has been sitting in nostro FCAs.

Further, the scrapping of US dollar transactions, which had necessarily made retailers and service providers extortionately price in RTGS in order to facilitate default US dollars transactions, will likely result in fair pricing of goods and services.

This cannot all happen overnight.

There is, however, more to be done.

Various Government agencies has to move in to ensure that compliance to the new monetary regime — which has however been satisfactory thus far — is enforced.

The Zimbabwe Revenue Authority and the Zimbabwe Republic Police (ZRP) all have a role to play.

But most importantly, the transacting public have to realise that if Zimbabwe is to fully industrialise, this painful route is the only way to go.

At the end of the day, it is not the critic who will count, but the men and women who are working day and night to ensure that Zimbabwe is restored to its former glory.

As Theodore Roosevelt once said: “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause . . .”

Zimbabwe will rise again.

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