Former Minister for Finance and Economic Development, Tendai Biti said that today’s much anticipated Monetary Policy Statement should rather strengthen the multi-currency regime instead of liberalising the exchange rate. Writing on social media on Wednesday, Biti said:
Today’s Monetary Policy will lack the thunder of a new currency after we caught them with their pants down. A decent Monetary Policy should however 1) demonetize the bond note 2) ring fence RTGS balances 3) strengthen the multi-currency regime 4) remove export retention 5) stop quasi fiscals.
Liberalizing or floating exchange rate is dealing with symptoms. Bond note should simply be ejected. Besides bond note and its fictional parity is set as law in the RBZ Act so only Parliament can float or liberalize exchange rate.
Liberalizing or floating exchange without ring-fencing RTGS balances will have the disastrous consequences of devaluing people s balances. Floodgates of litigation will open. The RBZ will be held to account after maintaining and defending the fiction of a bond, US $ parity.
Further floating exchange rate and retention of the bond note will guarantee the continued existence of a key pillar of corruption in this economy. ZANU elites will continue raiding the RBZ for cheap foreign exchange which they will arbitrate. Real reform is ejecting bond notes.
The truth of the matter is that no amount of economic tinkering can resolve the huge structural challenges Zimbabwe is facing. The crisis is political. It’s a crisis of legitimacy and governance. No one can govern without the consent of the people. Illegitimacy breeds illegitimacy.
With great respect to Venezuela, ours must surely be the worst government on the planet.