The opposition MDC Alliance has criticised the mid-term monetary policy and the fiscal measures which were announced by Reserve Bank of Zimbabwe (RBZ) governor and Finance Minister Mthuli Ncube on Monday. The opposition has said that the policies will worsen the suffering of Zimbabwe’s people who are already suffering. We publish the statement in full below:
Monetary Policy and Fiscal measures a toxic concoction
Two grown men teamed up to accelerate and exacerbate the already unpalatable suffering of the Zimbabwean people. Zimbabweans who have lost all but hope tuned into different media platforms expecting relief only to get a kick in the teeth.
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The MDC is disappointed but surprised by the so-called measures by both Mangudya and Mthuli Ncube. They border on sheer arrogance, narrow selfish interests and utter ignorance of how to turn around the status quo.
Yesterday Zanu PF sharpened the robber state. A shameless announcement of raft meant to pick-pocket the poor in a bid to fund the lifestyles of the political elites. Firstly the charges announced yesterday on electronic transactions in an attempt to create fiscal legroom for treasury are just but daylight robbery.
They are an encouragement for creative transactions and fuel for black market. The citizens will just reject spheres accessible to the state and reorganize themselves in autonomous spaces dealing a serious blow on revenue collection.
Secondly, Zanu PF can’t be the one to punish electronic transactions when they have been celebrating a cashless economy. As a matter of fact notes and coins contribute a paltry 2% of broad money supply as per official statistics from both the Treasury and the RBZ. More importantly, this is a war being declared on a particular class of Zimbabwe, the working people.
In the monetary policy statement, it is clear that only the working people are going to lose value. The “know your client” principle referred will affect mostly the poor who have not earned value from international sources in a long time.
Then comes the insanity around foreigners paying for services in forex, this is an unenforceable insanity. The gentlemen are probably intoxicated by a high grade of Indian hemp so potent that it needs to be protected by a patent.
This creates a whole lot of problems including the introduction of middlemen in purchases of basic goods.
We have always stated that the bond note must be repealed, that would be the end of story. The move to create two types of accounts borders on illegality, such acts must never happen in a democratic society.
The government is introducing a new currency through the back door in violation of the RBZ Act with all its flaws.
The government has demonstrated capacity to raid accounts whenever they are desperate, they will at some point raid the NOSTRO accounts.
As of now even by Ncube’s confirmation RBZ net claims against the government have exceeded the legislated limit by more than 300%.
Ncube even states that the government will not stop issuing toxic treasury bills, he instead modifies them and tries to bring in an auction element which will not curtail government spending.
These so-called measures are half-baked, we, therefore, restate the following suggestions we made in our SMART policy document.
i. Fiscal consolidation by, inter alia, pursuing of a primary balance and restoration of balanced budgeting.
ii. Rationalisation of expenditure and improving the expenditure mix.
iii. Building capacity on revenue management and strengthening public finance management systems.
iv. Taking measures to reduce debt and improving debt management to reduce the risk of inflationary pressures, crowding out of private sector activity and exacerbation of liquidity shortages.
v. Expediting State Owned Enterprise (SOE) Reform.
vi. Rationalisation of the public service and elimination of ghost workers to reduce employment cost to 30% of total expenditure.
vii. Expansion of the revenue base through increased productivity, and expansion of the economy.
viii. Immediate resolution of the cash crisis by addressing confidence issues, scrapping the bond note, strengthening the multiple currency regime.
ix. Central Bank reform including auditing of its assets and liabilities.
x. Export promotion, narrowing the current account and rationalising the capital account. Accelerate “ease of doing business” reforms and promote policy coherence and consistency.
xi. Commencement of urgent debt resolution and re-engagement processes.
xii. Plugging the loopholes in the commodity sectors by, inter alia, enacting of a new Diamond law and a new Minerals and Mining Act, immediately subscribing to the Extractive Industry Transparency Initiative (EITI) and consolidating Zimbabwe’s position in the Kimberly Process Certification Scheme.
xiii. Bolstering social protection and immediate rehabilitation of all social infrastructure including health, education, people living with disabilities, vulnerable communities, women and children.
xiv. Taking measures to protect private property rights including strengthening and executing BIPPAs, re-joining Multilateral Investment Guarantee Agency (MIGA) and provision of title to occupiers of land. The review and revisiting of investment agreements, mining grants and any disposals of Zimbabwe’s assets.
xv. Convening the second Zimbabwe Conference on Reconstruction and Development. Given the huge development trap that Zimbabwe finds itself in, the MDC Alliance government will within its first year organize a conference on reconstruction and new development.
These are the measures that will arrest ballooning deficits which are being funded through toxic means creating both a cash shortage and crowding out the private sector.
These measures will also increase productivity while expanding the tax base without overburdening the working masses of Zimbabwe.
The MDC will deliver a full response to both the fiscal measures and the monetary policy offering tangible solutions including currency reforms in line with our SMART document.