Eddie Cross: We Don’t Need A Strong Currency

Former member of the Reserve Bank of Zimbabwe’s Monetary Policy Committee, Eddie Cross has said he is excited about the Zimbabwean economy. He made the remarks while talking to Techzim’s Valentine Muhamba in a recent episode of the Technikari podcast. Cross also explored the recently launched ZWL $50 note, the contrast in policy and environment from Rhodesia to present-day Zimbabwe. The forex auction system and if it has been a success, his current capacity in financial policymaking and the general outlook going forward. Pindula News present some of the major points that came off the discussion.

2013 Election Onwards

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  • ZANU PF reversed the gains of the Government of National Unity (GNU) by reverting to the old system of spending more than the country was earning.
  • This was contrary to recommendations by GNU Finance Minister Tendai Biti. He had said we eat what we kill.
  • We can’t the economy out of nothing
  • I’m excited about the Economy at the moment – he cited projections by the IMF, Finance Minister Mthuli Ncube, a boost in mineral exports and a boom in the Agriculture sector.
  • 10 000 new jobs created – records are with NSSA.

What happened to the billions of USD Zimbabwe had in 2017?

  • When Mthuli Ncube came into office, Zimbabwe had US$23 000 billion.
  • Ncube, however, said it was not real money but Real Time Gross Settlement (RTGS) which was not equal to the physical USD anywhere around the world.
  • Ncube then devalued the currency to reflect the real value which is way lower than the 2017 figure.
  • It was a tough call but was necessary since it is premised on turning the economy around.
  • The measures brought pain to the general populace and Zimbabwe will take a long time to recover fully.
  • We’re still one of the poorest countries in the world.

The Forex Auction

  • The RBZ foreign currency auction diminished the parallel market.
  • The parallel market used to trade about 70 per cent of the foreign currency but that has since changed due to the formal RBZ forex auction.

We don’t need a strong currency

  • The Chinese Yuan is an example.
  • We should buy the forex from the market to depreciate the local currency.

State Capture: Resistance in the Regime

  • There is massive resistance within the government to Mnangagwa’s reforms as insiders will lose if the new system is fully established.
  • When Mnangagwa took power in 2017, he had no control over the government, the military had control. The anomaly was con=rrected after elections but still, there is massive resistance to date.
  • US$15 Billion Leak – When Mugabe said USD15 billion was lost in Marange, he never told us he was also a beneficiary.
  • Chiyangwa at some point said if you want to be a millionaire, join ZANU PF.
  • Mnangagwa is changing that.
  • He is reforming the gold sector and the diamond sector despite his family having a direct interest.

The Future

  • We need our local currency.
  • We already have US$1.3 billion in our Nostro Accounts, unprecedented.
  • If Zimbabwe is to de-dollarise, there should be a roadmap detailing how that is going to be done.

More: Techzim

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