22 February 2019

Zimbabwe: Govt Too Ashamed to Announce New Currency - Says MDC

Photo: ZeroOne
Before the worthless bearer cheque, there were agro-cheques over a decade ago. Now the currency has changed again.

President Emmerson Mnangagwa's administration came short of announcing a new currency because of shame after being caught out, former finance minister Tendai Biti has said.

The former treasury chief was responding to Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya's Monetary Policy Statement (MPS) which was presented on Wednesday.

Biti last week revealed government was on the verge of announcing a new currency for the first time since 2009 when the local dollar was ditched on the back of an economic meltdown.

Government vehemently denied it was introducing a new currency.

Economist and MDC national executive member Tapiwa Mashakada said Zimbabwe effectively has a currency.

"My reading of the MPS is that Zimbabwe now has a virtual local currency called 'RTGS dollar' (Real Time Gross Settlement)," he said.

"This is a Zimdollar by any means. The local unit will be determined by the interbank market of forex and forex bureaus.

"These trading rates will be published daily in banking halls and the media. The economy has de-dollarized cleverly.

Zimbabwe now has a Sovereign currency called 'RTGS Dollars' which is a euphemism for Zim-dollars. It's like saying you eat bacon but not pork."

In his statement Mangudya removed the artificial 1:1 value between the US dollar and the local surrogate currency known as the bond note.

The RBZ boss also denoted all RTGS balances, bond notes and coins as what he called "RTGS dollars" while the US dollar will now effectively be treated as foreign currency.

The former economic planning minister argued that Mangudya's retention of the multi-currency system was government's sinister way of hedging its bets for a possible joining of the Rand Monetary Union.

Mashakada also pointed to the fact that South African President Cyril Ramaphosa will be in Harare for a State visit in the second week of March.

"Some people are being fooled by talk of multiple currency retention. This is fake. It is being done to keep a small window open for quasi-fiscal operations and rent seeking by a few while the rest of public transactions are done using RTGS dollars.

"The other reason for keeping the multiple currency in theory is to leave room for joining the Rand Monetary Union which requires a country to have own sovereign currency as a pre-condition," said Mashakada.

Meanwhile, Biti trashed Mangudya's MPS arguing it had illegality written all over it.

Liberalising or floating the exchange rate is dealing with symptoms. Bond note should simply be rejected," he said.

"Besides bond note and its financial parity (with the US dollar) are set in law, the RBZ Act and only Parliament can float or liberalise exchange rate."

The MDC deputy national chairman said Mnangagwa's administration does not have the consent of citizens to govern.

"The truth is that no amount of tinkering can resolve the huge structural challenges Zimbabwe is facing. The crisis is political. It's a crisis of legitimacy and governance.

"No one can government without the consent of the people. Illegitimacy breeds illegitimacy," he said.

The MDC argues that Mnangagwa rigged his way to victory in last year's elections despite losing a Constitutional Court petition in which the opposition wanted the results of the presidential election overturned.

"Modern functional states are founded on trust and transparency. This clearly is not part of Zanu PF DNA," said Biti.

"The regime disingenuously and mendaciously de-dollarized the economy by informally re-introducing the Zim-dollar now called the RTGS dollar through the back door.

"Floating the exchange rate and retention of the bond note will guarantee the continued existence of a key pillar, corruption in this economy."

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