Former Deputy Minister for Information, Publicity and Broadcasting Services, Energy Mutodi, has accused Finance Minister Mthuli Ncube of being too slow to respond to negative economic developments.
Speaking in the National Assembly, Mutodi, who is the Goromonzi West MP (ZANU PF), asked Ncube why it took him such a long time to realise that buying and selling foreign currency has become the primary business in the country.
Mutodi also asked Ncube why Zimbabwe continued to use bond notes when he (Mthuli) has previously stated that “bad money drives out good money” before he became a Cabinet Minister.
Below is the full text of Mutodi’s submission to the National Assembly:
Hon. Mutodi: Thank you Madam Speaker Ma’am. My point of clarity to the Minister is that before his assumption of duty as a Minister of Finance, he indicated that bad money drives out good money.
He was referring to the use of a surrogate currency, the bond notes that we are using.
Surprisingly, the Minister has maintained the use of bond notes. This means the use of dual currency for the economy.
What measures have we put in place as a country to ensure the sustainability of this dual currency?
We know it very well, he is a professor of economics but a dual currency needs to be delicately managed to ensure that we do not lose public confidence in the banking sector.
The Minister must clarify the measures that he has put in place to ensure that the dual currency is sustainable.
Madam Speaker Ma’am, we have seen recently an exchange rate driven inflation. I want to thank the Minister and His Excellency the President for the temporary hold on bank lending.
However, we need clarity on what is going to be done to ensure that critical manufacturing companies continue to survive and be able to provide goods on supermarket shelves.
Why did it take a long time for authorities to realise that the primary business on the market was now buying and selling foreign currency?
In the first place, who is supplying the RTGS dollars to the parallel market? Is it the banks?
Is it the contractors that Government has engaged in the road rehabilitation programme? Who is actually supplying the RTGS?
With the contractors, it is clear that when you want to do a major project like road development, obviously you need a long-term loan to finance it. How are we financing the road projects Madam Speaker Ma’am?
If you are financing from our fiscal budget, is that not contributing to the exchange rate driven inflation because the contractors are being paid in RTGS and they seek the USD on the black market?
That affects the ordinary person who is earning a ZW$40.000 salary. Obviously, they are paying rentals and fuel in USD. We need clarity on that Honourable Minister.
The last issue I will talk about is the economic planning investment. Are we planning the economy? Are we estimating our macro-economic variables on time?
How our money supply, our interest rates, inflation and other factors are going to perform over time such that not only the local people but also international investors can have confidence in our economy?
Also, the political risk factor, if you are driving towards attracting investment. We are competing for Foreign Direct Investment with other countries in the SADC region and Africa at large.
How have you dealt with the political risk factor? Are we sure that the lack of title deeds on farms is helping us in any way?
I humbly submit Madam Speaker Ma’am.