RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya — who is usually calm and patient — yesterday lost his cool under pressure from legislators at a pre-budget seminar in Bulawayo who took him to task over government’s insistence that the United States dollar is trading at par with the bond note.
The central bank boss had also insisted in pegging the US dollar at 1:1 to the Real-Time Gross Settlement (RTGS) payment system, although the dollar is trading at a higher value on the alternative market.
Angry MPs protested against Mangudya and drowned his presentation as he tried to explain the challenges facing the economy as well as the US-RTGS official exchange rate rate.
Others heckled him from the back, telling the apex bank’s boss he was implementing “utopian” models that would not take Zimbabwe anywhere.
“Hazvishandi izvo zvamunotaura governor. Akusebenzi lokho governor. (That does not work governor!),” shouted a legislator as the raucous interventions hit fever pitch. An effort to expound on why the incentive was in place further fuelled disapproval, with legislators banging desks to disrupt the governor. Hitting back, Mangudya told the legislators off.
“Honourable members, you can say whatever you want. These are measures that are in place to ensure that this economy works,” Mangudya said.
At one point soon after unveiling the bond notes two years ago, the central bank governor announced he would resign if the bond note fails to save the ailing Zimbabwean economy.
It took the intervention of the Speaker of the National Assembly, Advocate Jacob Mudenda, to cool down tempers. Mudenda threatened to eject “ungovernable” legislators from the meeting.
“Members, we can’t have this confusion and chaos going on like this. If you disagree with what has been said, there are channels on how you can air your concerns,” Mudenda said. “Chief whips, take note. If there is any member who continues to behave in this untoward manner, if you can’t take what is said here, we will ensure that you are out of here. We can’t accept that.”
MPs said the exchange rate was untenable and should be reviewed with immediate effect. Outspoken Norton independent legislator Temba Mliswa said there was need for Zimbabwe to adopt the United States dollar as a currency given that the RTGS and multi-currency regime had failed to propel the economy to success.
“I would like to state this and make it clear to you governor as well as you Finance minister (Professor Mthuli Ncube) that the multi-currency system has failed dismally. We need to adopt the US dollar as a matter of urgency. Simple,” Mliswa said. “It is very clear also that the RTGS arrangement is also not going to work and we need to find a solution to this situation, which is to adopt the US dollar as our currency.”
Binga legislator Prince Dubeko Sibanda weighed in, describing the 1:1 exchange rate as “fiction”.
“This fiction of thinking that one United States dollar is equal to one bond dollar will not work at all. We need to be realistic in our thinking and come up with tangible solutions to our problems,” Sibanda said.
In his presentation, Mangudya said Zimbabwe’s forex was being gobbled by imports, arguing that the country’s productive sector was the missing link in the efforts to turn around the country’s economy.
“We need to re-balance the economy. You will realise that all the foreign currency generated by the gold and tobacco sectors is chewed up in imports. Our productive sector is unable to meet the vast demands of commodities that we have as a country,” Mangudya said. “We are spending millions of dollars importing fuel, cooking oil and flour for our bread. We have to produce all these things as a country if we are to be able to reduce the import bill, thereby reducing the foreign currency we use when procuring things outside the country.”
The pre-budget seminar ends in Bulawayo on Sunday.