Treasury nails Zim on cross

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THE government last week did the unthinkable: for the second time in a decade, it robbed the Zimbabwean people of their hard-earned savings. The robbery emanates from a decision to convert a domestic debt of US$9,5 billion at a rate of 1:1 to the Zimbabwe dollar.

Zimind Comment

To say we were shocked at such a brazen heist by Emmerson Mnangagwa’s government would be an understatement.

The latest news came after individuals and companies were mugged of incomes and value through the decision to introduce bond notes, a currency the central bank claimed had par value to the US dollar. Hardly two years later, they shifted the goalposts and said the currency was to trade at a rate determined by an inter-bank, effectively causing losses running into billions of dollars to honest and hardworking people who had money in the bank. US dollar bank accounts were separated from local quasi-currencies.

Now, the currency is trading at a rate of ZW$10:US$1 on the parallel market. Banks are slightly below this on average.

The smoking gun emerged from government debt figures contained in the mid-term fiscal review statement.

A domestic debt stock of US$9,6 billion as at December 2018 is now a mere ZW$8,8 billion or US$880 000. This was a result of a decision by government to convert the debt at a rate of 1:1.

At that conversion, government technically found a way to circumvent its obligations to pay a US$7 billion obligation.

This was daylight robbery. And no government under the sun must be allowed to get away with such reckless thievery and dishonesty.

Why are we concerned by this? Given the nature of banks — who bought the bulk of government-issued paper a few years ago — and the intermediary role they play in the economy and their business models, it is evident that ordinary Zimbabweans have also been hurt by this action indirectly. It is not a simple issue of robbing banks. When this happens, it is indeed the grass that suffers when the elephants fight. Banks rely on deposits from ordinary Zimbabweans who want to save. Essentially, when you decide to mug the bank as a government, you are stealing from the people.

Nothing could be more criminal. And for a government that purports to look out for the interest of its citizens, this conduct is unethical, immoral and unacceptable.

Instead, government must be encouraging a culture of savings.

The state, through the central bank, embarked on imprudent practices of financing the budget deficit through creation of new money and issuance of Treasury Bills and decimated the value of the currency — rendering savings useless.

The decision has far-reaching consequences given that investors elsewhere generally believe that sovereign debt is a safe or risk-free investment.

Investors, naturally, are rational beings and will make decisions based on this available information. No investors will come and invest in a country where they stand to lose both principal and interest to a predatory state.

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