Analysts have slammed Finance Minister, Mthuli Ncube’s announcement of government intentions to introduce a local currency.
A Treasury insider told the Daily News that the announcement was ill-timed, retrogressive and is likely to undermine the confidence the government has been trying to build.
Former Finance minister, Tendai Biti reiterated above sentiments. He said:
That is rank madness. How does one change currencies like they are changing diapers? What is the point of changing the name of the currency if it will suffer the same fate as the bond note?
The RTGS dollar will now depreciate even more and the black market rates will rise. It will have a catastrophic impact on industry which relies mainly on imports.
There will be massive externalisation as people trade offshore and there will also be increased budget deficits.
A Political Science lecturer at the University of Zimbabwe, Eldred Masunungure believes Ncube’s announcement is not in sync with reality on the ground. Masunungure said:
There is consensus among stakeholders, including consumers, that economic fundamentals around productivity have not changed much, hence it is clear that the announcement is wishful thinking as it is not backed by the situation obtaining on the ground.
Until the so-called fundamentals are right, there is no end in sight of our problems as a country because the currency will suffer the same fate as the RTGS.
So, Ncube’s proposal is not prudent and is bound to fail, especially if there is no increase in productivity to have reserves that will hedge the currency.
More: Daily News