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The Return of The Zimbabwe Dollar Is Inevitable Warns Biti

6 years agoThu, 26 Oct 2017 12:10:33 GMT
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The Return of The Zimbabwe Dollar Is Inevitable Warns Biti

Former Minister of Finance and leader of the PDP Tendai Biti has warned that the return of the Zimbabwe dollar is unavoidable as the government has exhausted its capacity for resource mobilisation as no one is willing to accept Treasury Bills (TB) anymore. Presenting the State of the Economy Address (SEA), Biti said all right-thinking Zimbabweans should reject the reintroduction of the Zimbabwean dollar as the economy is unable to support a currency. Presenting the SEA, Biti said:

The Pitfalls of Deficit Financing and the Inevitable Return of the Zimbabwe Dollar

We respectfully submit that financing of the budget deficit has become the most immediate short-term cause of the current economic crisis. The government of Zimbabwe sought to finance its deficit through legal and extra-legal means which have included the issuance of unchecked TBs.

The net effect of these borrowings has been to crowd out the financial markets. Making domestic resource mobilization the sole source of budgetary financing has been a disaster and for this Chinamasa must take full blame. It is deficit financing that is leading the government to increase the stock of RTGS in the system. RTGS amounts are being released into the economy, whilst they are not backed by actual value.

For example, 1.4 million tonnes have been delivered to the Grain Marketing Board and all the farmers have been paid by RTGS balances in the total sum of US$546 million which is not backed by any value.

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Our biggest fear is that ZANU PF’s appetite for expenditure is insatiable. Thus expenditure and expenditure obligations will continue to increase whilst the fiscal space continues to shrink. However, this government has exhausted the capacity of domestic resource mobilization as no one is prepared to accept TBs anymore. In this situation, we view the return of the Zimbabwe Dollar as inevitable.

It will be a sad day indeed when that Zimbabwe dollar returns, for we simply do not have an economy to sustain a currency.

As democrats and right thinking Zimbabweans, we must reject this impending Armageddon.

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