New Zimbabwe.com

Biti, Mthuli Ncube in battle of wits over failing economy

By Anna Chibamu


PARLIAMENTARIANS on Wednesday, were treated to a battle of wits between Finance Minister Mthuli Ncube and former Treasury chief Tendai Biti over the state of the economy.

Biti who has taken it upon himself to consistently disparage Ncube’s economic policies describing them as “fictitious” seemed to have stirred a hornet’s nest after the Finance Minister turned the guns against the MDC vice president.

The altercation started when Biti, during Wednesday’s question and answer session demanded an explanation as to why Ncube failed to honour his promise to turn the economy around.

“Mr Speaker Sir, when the Minister of Finance assumed office, he promised to mitigate the challenges facing the economy but, 10 months later the economy is in tailspin,” said Biti.

Zimbabwe’s economy has in the past few weeks gone into meltdown with prices of basic commodities shooting through the roof amid high inflation with the local RTGS currency having lost nearly half of its value in just a week.

In response, Ncube defended his record since taking charge of treasury last year.

“The fiscal position of the country has been turned around in six months, in the sense that we have eliminated the deficits on month by month basis.

“We have surpluses and now we start focusing on how to deal with social protection issues so as to protect vulnerable members of our society from the vagaries of inflation including the drought and the cyclone. We are beginning to do that,” said Ncube.

However, Biti was not done just yet: “There are massive shortages. Given the runaway inflation which is now around 300% and given the serious implosion of the black market rate which I am told is today between 7.1 and 8.2. Why as a matter of policy is the Minister simply not demonetising the RTGS$ and the Bond note and revert to the dollarisation regime?”

The attack brought Ncube out of his seat swinging, accusing the opposition leader of having destroyed the economy’s ability to sustain its own currency during his tenure as Finance Minister.

“Pertaining to the demonitisation of the RTGS dollar and adopting the US dollar, what happened when the US dollar was adopted basically as a defacto currency, during the time that the Hon Member as a Minister, what he (Biti) did is he destroyed the country’s ability to conduct its own monetary policy completely.

“So the Central Bank was taken out of all monetary policy ability and what was left was fiscal policy only. Those are the facts and I have said that from the beginning that we need both legs for macro-economic management, the fiscal and monetary policy legs,” Ncube said.

Ncube defended the accounting system being used by government adding since last October he has been working on restoring what Biti destroyed between 2009 and 2013.

Biti, the recently elected opposition vice president seemed to confirm Ncube’s claims by arguing some countries are working well without Central Banks.

However, Ncube argued that Zimbabwe could not adopt the US dollar because some banks have refused to supply the country with the Greenback for fear of victimisation by the US government for violating sanctions imposed on the country. He added adopting the US dollar will result in shortages of foreign currency on the market. The Treasury boss claimed he was not going to “chase the black market because it will always be there.”

Biti further argued that the budget of 2019 was expressed in US dollars but, the accounting of government as of 20 February, 2019 has been based on the RTGS.

In response Ncube said the surplus announced by government was in both currencies.

“Yes we have a surplus in both RTGS and US$. The cash accounting in terms of the budget report is in line with international standards. Those are the facts,” said Ncube adding Zimbabwe will move towards balance sheet accounting by 2022.