Breaking News

'Monetary Policy Statement will bring sanity' says RBZ Governor - will not and never will as long as insane rule the roost

by Nomusa Garikai
21 February 2019 | 1224 Views
The primary objective of the Reserve Bank of Zimbabwe's (RBZ) long awaited Monetary Policy Statement was to bring sanity to Zimbabwe's chaotic economic world, especially the madness in financial and currency market. As RBZ Governor, Dr John Mangudya, readily admitted when he launched the policy statement. "This is essential in order to bring sanity in the foreign currency market whilst at the same time promoting exports, diaspora remittances and investments for the good of our national economy," he said.

Sadly, instead of bringing sanity and stability he has only succeeded in mudding the muddy waters. After going through the statement it is clear that no one in RBZ and Ministry of Finance; headed by the flamboyant and blundering Professor Mthuli Ncube, who approved the statement; know what they are doing.

The statement confirms that insanity still rules supreme in Zimbabwe because nothing in the statement makes any sense. Nothing!

"Denominating the existing RTGS balances, bond notes and coins in circulation as RTGS dollars in order to establish an exchange rate between the current monetary balances and foreign currency. The RTGS dollars thus become part of the multi-currency system in Zimbabwe. The legal instrument to give effect to this has been prepared," said the statement.

It should be noted here that RTGS balances were, until now, denominated Bond Notes, the electronic equivalent of Bond Notes and coins. The value of the RTGS was less than the Bond Notes and Coins for various reasons including convenience and electronic transactions were subject to the new 2% tax introduced last October by Minister Ncube. Whilst the exchange rate to Bond Notes and coins was 3:1 to the USD the equivalent RTGS exchange rate was 4:1 or worse.

So in denominating all Bond Notes balances and cash to RTGS$ means  people have just lost out, instead of having Bond Note worth US$0.33 they now have RTGS$ worth US$0.25!  

"The RTGS dollars shall be used by all entities (including government) and individuals in Zimbabwe for the purposes of pricing of goods and services, record debts, accounting and settlement of domestic transactions," we are now told.

When Governor Mangudya was asked what is exchange rate for the RTGS$ against the USD; his reply was that the RBZ will not set a rate but would let the market decide.

It should be remembered here that until this statement government had recognised only the official exchange rate of 1:1 of Bond Note to USD.




So by acknowledging the unofficial exchange rate of 4:1 those with the economic muscle will impose the exchange rate that suits them. Employers, including government, will never adjust the workers' wages, agreed at on the basis of 1:1 exchange rate. Meanwhile all the goods and services will be charging in RTGS$ using the highest exchange rate possible!

Last time, October last year, when Finance Minister suggested government would let the Bond Note float this had caused serious financial turmoil as people rushed to sell their Bond Notes for the more stable USD; the exchange rate soared to as much as 10:1 and only started to come down when the Minister withdraw his foolish statement!

It is hardly six months since Minister Ncube's ill-advised exchange rate comment and yet government has once again put its foot into it! Government has just fired the starting gun of the rat race to buy USD with RTGS$. The value of the latter will fall.

If government tries to impose price control by insisting on a stable RTGS$ price whilst allowing the market to determine the later's value this will only result in shortages. Zimbabweans have been queuing for cash, fuel, bread, etc. the queues are only going to get longer and the list of commodities is short supply will increase.

"The Bank has arranged sufficient lines of credit to enable it to maintain adequate foreign currency to underpin the exchange market. This is essential to restore the purchasing power of RTGS balances through safeguarding price stability emanating from the pass-through effects of exchange rate movements," said Governor Mangudya.

Zimbabwe's chronic shortage of foreign currency is a child of the country's skewed balance of payment. We are importing far more than we can pay for through our export earnings. We need to revive the country production to reduce the volume of imports, we are now net importers of food a far cry from our breadbasket of the region days. Creating lines of credit, dictating what people should spend their hard earned incomes on, etc. are not going to end the country's foreign currency shortages and all the other economic problems.

It is laughable that Dr Mangudya should be admitting to the need to "bring sanity to the foreign currency market" when he knows that it was the RBZ and Ministry of Finance's ill-advised policies that brought the insanity in the first place. By the same token he and Minister Ncube know the recent statement will do nothing to end the chaos and insanity in the Zimbabwe economy.

The two gentlemen know the madness in the Zimbabwe economy will not end until something is done to end the rampant corruption and to restore investor confidence in Zimbabwe as a stable country and not a pariah state ruled by vote rigging thugs. There can be no economic recovery, much less prosperity, whilst the country remains a corrupt and lawless nation. There can never be sanity whilst the insane continue to rule!

Mthuli Ncube RBZ Monetary Policy Statement RTGS$


Disclaimer:
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.

Source: zsdemocrats.blogspot.com

Comments

Latest News

Chamisa demands Chief Ndiweni's unconditional release

by ZimLive | 17 August 2019 | 445 Views

Chief Ndiweni's incarçeration an attack on peoples rights - Chief Ndi...

by Iphithule Maphosa | 17 August 2019 | 291 Views

'Prisca Mupfumira wanted to remove General Chiwenga'

by Mandla Ndlovu | 17 August 2019 | 6111 Views

Royal Crown Council condemns Chief Ndiweni judgement

by The Royal Crown Council | 17 August 2019 | 1830 Views

Ndiweni is an MDC-affiliated Chief and so can do no wrong

by Petina Gappa | 17 August 2019 | 1439 Views

'Heavy is the head that wears the crown' said W Ncube - meant 'Empty i...

by Patrick Guramatunhu | 17 August 2019 | 987 Views

CIOs block release of Chief Ndiweni court judgment

by Mandla Ndlovu | 17 August 2019 | 3845 Views

Heavily armed police and Army jet besiege Bulawayo

by Mandla Ndlovu | 17 August 2019 | 7991 Views

BREAKING: Tabitha Khumalo arrested

by Mandla Ndlovu | 17 August 2019 | 7226 Views

Henry Olonga takes on Mnangagwa...again

by Mandla Ndlovu | 17 August 2019 | 6306 Views

To what end Mr Chamisa, does the end justify the means? - Dear Nelson ...

by Munya Shumba | 17 August 2019 | 1261 Views

Nhlanhlayamangwe Ndiweni an illegitimite Chief?

by Nicholas Ncube | 17 August 2019 | 1923 Views

ZANU PF youths in police uniform beat up Harare protestors?

by Mandla Ndlovu | 17 August 2019 | 3723 Views

Woman scalds hubby for not picking her from church

by Staff reporter | 17 August 2019 | 1821 Views

Bosso player & manager fight: New details emerge - NEW details have em...

by Staff reporter | 17 August 2019 | 1255 Views

Chamisa vows more protests despite Harare ban

by newzimbabwe | 17 August 2019 | 1018 Views

Welshman Ncube speaks out

by Mandla Ndlovu | 17 August 2019 | 4806 Views

Mthuli Ncube has a plan, but is it gobbledegook?

by Bloomberg News | 17 August 2019 | 2829 Views

Woman finds hubby in bed with sex worker, arrested for assault - A Chi...

by Staff reporter | 17 August 2019 | 2124 Views

Newly appointed chiefs have no power to apportion land - Masvingo Prov...

by Staff reporter | 17 August 2019 | 681 Views

Pupurai Togarepi invests CDF in clinic

by Staff reporter | 17 August 2019 | 719 Views

Handcuffed rape suspect bolts from court - A Kwekwe man who could not ...

by Staff reporter | 17 August 2019 | 1233 Views

Tsikamutandas leave in a huff as villagers bay for their blood - HUNTE...

by Staff reporter | 17 August 2019 | 1121 Views

Cheating wife dumps husband after busting her - FOR a Bulawayo woman, ...

by Staff reporter | 17 August 2019 | 2194 Views

Man parades neighbour's hat, use condom - A MAN from Gokwe paraded a u...

by Staff reporter | 17 August 2019 | 910 Views

Man files US$300,000 lawsuit against wife's lover - A LOCAL businessma...

by Staff reporter | 17 August 2019 | 487 Views

Woman slaps hubby with lifetime sex ban - FOR a sex-deprived Bulawayo ...

by Staff reporter | 17 August 2019 | 711 Views

Wife snatching businessman at it again - A GWANDA businessman – who ...

by Staff reporter | 17 August 2019 | 618 Views

United Nations statement on MDC demonstration

by Mandla Ndlovu | 17 August 2019 | 1825 Views

Entertainment

Zimfest delivers another 'phenomenal' festival

by Tidi Kwidini | 07 August 2019 | 628 Views

Should you be betting on reality TV show outcome too?

by Staff Writer | 05 August 2019 | 81 Views

WATCH: Jah Prayzah featuring Iyasa Sadza nemuriwo song

by Mandla Ndlovu | 23 July 2019 | 5593 Views

Muvhango star Marang Phala visits Prophet Sovi's church

by Mandla Ndlovu | 22 July 2019 | 9542 Views

Pure Black set to take Africa by storm

by Mandla Ndlovu | 04 July 2019 | 997 Views

'Cook Off' movie set for UK premiere

by Agencies | 02 July 2019 | 810 Views

Zimbabwean rapper teams up with top selling American singer

by Staff Reporter | 17 June 2019 | 1319 Views
iBlog

Five Reliable Outlook Pst File Repair Tools

Outlook pst files can become corrupted -- and when that happens, work grinds to a halt. if your organization relies on outlook, one of these tools could save the day. outlook is the industry standard groupware tool. let's take a look at five that can... Read More
ITnews 04 May 2015 ago

Mobile Spy Software Maker Mspy Hacked

mspy, the makers of a software-as-a-service product that claims to help more than two million people spy on the mobile devices of their kids and partners, to have been massively hacked. a public relations pitch from mspy to krebsonsecurity in march ... Read More
SecNews 17 May 2015 ago