By Leopold Munhende
FORMER finance minister Tendai Biti has described Reserve Bank of Zimbabwe governor as a fool, saying his monetary policies are insufficient to tame inflation.
Biti said this in a scathing attack on Mangudya’s ‘shallow’ monetary policy statement issued Monday during an interview at New Zim TV’s premier weekly show, The Agenda.
Mangudya, in the monetary policy statement, claimed he was doing enough to bring the country’s inflation rate to 35% by year end.
But Biti dismissed those claims saying if anything, inflation will keep rocketing.
He predicted that at the rate at which inflation is hitting the economy, the exchange rate will by December hit a high of US$1: ZW$1 000.
Biti said President Emmerson Mnangagwa and his administration were practising feja feja economics, a slang for uncoordinated and disorderly financial management.
He also invented the word ginyanomics to describe the sort of economics practised by President Emmerson Mnangagwa’s government.
Biti also lay into Finance and Economic Development minister Mthuli Ncube’s decision to maintain the Zimbabwe Dollar as the country’s main currency at a time it is steadily losing value and fuelling inflation.
“My suspicion is that the exchange rate will by August stand at US$1 to ZW$400, which is a lot of depreciation,” Biti said.
“Very soon the parallel rate will be at US$1 to ZW$500 but they are afraid of that especially in a year before elections, so what they are doing is squeezing the tap for the RTGS dollar by withdrawal limits and closely monitoring corporates’ current accounts to ensure there is no movements to fuel Fourth Street (illegal exchange rate market). To be very crude by end of year we will be very close to US$1 to ZW$1000, it is back to 2008.”
The Citizens Coalition for Change (CCC) vice president said Mangudya’s MPS was based on Ncube’s flawed assertions that the country was on the mend yet by pointing to local currency indices that did not reflect on the ordinary citizen.
“The elephant in the living room is the dual economy that Zimbabwe has, Mthuli is pretending to administer a certain economy, prescribe solutions to a certain economy but the rest of us are in another reality, his is a reality distoted field, a false field,” said Biti.
“There is a US dollar economy where most of us live in, where shops will not accept anything other than the US dollar, where school fees is paid in US dollars, where fuel is paid for in US dollars, where rentals are in US dollars, where houses are sold in US and that is the bulk of the economy. Mangudya and Ncube are in this artificial world of this Zimbabwe dollar economy so when he pronounces the monetary policy he is pronouncing it for this small non-existent economy which is controlled by cartels,” he said.
“Those who are saying inflation has gone down need to be asked the economy they are measuring, will they be measuring the cash US dollar economy or the artificial, false non-existent Zim dollar economy. It is a cantankerous economy, someone once called it a casino economy but there are rules in a casino…this is a sewer, in a sewer you cannot measure the extent of the stench, you cannot measure the extent of the flow. It is a dog’s breakfast but one which many dogs will not touch by a long mile.”
Ncube scrapped use of the US dollar as the country’s main currency in 2018, reintroducing the Zimbabwe dollar against advice from economic experts including Biti.
They highlighted the lack of fundamentals that support a local currency and predicted it would lose value.
Biti suggested Ncube should abolish the foreign currency exchange floor and avert an impending disaster akin to the 2008 crisis by dollarising.
“Dollarise but retain the Zimbabwe dollar, abolish the auction floor so it finds its natural mark in the market. They dedollarised when the fundamentals were not in place. There is no country that involuntarily dollarised which has been able to dedollarise because it is a confidence thing…what you can do is you dollarise, bring your currency so it serves as change, as a transactional instrument not as a storer of value, value continues being kept by the hard currency. If Mangudya thinks he can do it, then he is a fool,” he said.
“It is a confidence thing, we do not have confidence in Mnangagwa and that man with a high propensity to lie Ncube.”
Biti suggested a return to what he termed the “We eat what we kill” principle of strict cash budgeting if Zinbabwe was to get back on its feet.
He also argued Zimbabwe has enough US dollar reserves to use the currency as its main tender, highliting that government had also resigned to charging services in the American dollar.
“I always argue Ginyanomics do not work…there will be an implosion. Every tax is now in US dollars, even number plates are in US dollars, passports are in US dollars, so they are completely dishonest people, they are completely mendacious people, they are necrophilia, it is a disaster.”
Biti told New Zim TV Ncube had no surplus to talk about as it was being calculated in the local currency while parliament had gone on to assume a ZW$3,4 billion debt from the central bank despite the surplus.
Biti was finance minister during the Government of National Unity (GNU) between 2009 and 2013.
This interview is available on NewZimbabwe.com’s Facebook page https://www.facebook.com/newzimbabwecom/videos/370133857827042/ and on the NewZim TV YouTube channel: https://www.youtube.com/watch?v=xxRUXUbjJTw