HomeAnalysisCandid Comment: The economy is not stable, Cde Chiwenga

Candid Comment: The economy is not stable, Cde Chiwenga

PRICES of goods and services have been increasing in recent weeks, as inflation continues rising.

The government has over the years failed to fix the economy despite flowery rhetoric about budget surplus and purported macro-economic stability.

Vice-President Constantino Chiwenga told a Zimbabwe International Trade Fair business conference in Bulawayo this week that the price increases were unjustified because economic fundamentals were stable.

With currency volatilities, high fuel costs, low capacity utilisation, poor agricultural yields and high unemployment crippling the economy, these are indicators of an unstable economy.

The Zanu PF government has preached that the economy is improving but facts prove otherwise. Citizens are wallowing in extreme poverty. There is really nothing to celebrate. Talk of a stable macroeconomic environment is just hollow propaganda.

Even the Confederation of Zimbabwe Industries (CZI) recently issued a paper making strong recommendations on how the government should liberise the foreign exchange rate, which is currently being controlled through the official forex auction system. The auction has a backlog and bidders are forced to wait for over four weeks to access the money.

In essence, the forex auction is a flop. Command economics do not work as the laws of supply and demand will determine what happens in the economy.

Launched in June 2020, the Dutch auction system has failed to find the real value of the Zimbabwean dollar. Shockingly, even Finance minister Mthuli Ncube professed ignorance over the real value of the local unit.

This shows that Zimbabweans will have to endure skyrocketing prices of basic commodities and services as the Zimdollar is in a tailspin.

The Zanu PF government should allow the market to determine the real value of the Zimdollar instead of manipulating the exchange rate, much to the detriment of the economy, in the long term.

While Reserve Bank of Zimbabwe governor John Mangudya allayed fears by business of a possible raid of Nostro accounts as foreign currency shortages bite, the market remains worried by the continued currency instability.

If the apex bank dares raid private FCA accounts, then investor and business confidence will utterly collapse.

In a country struggling to attract foreign direct investments, the monetary authorities must keep their word in protecting foreign currency accounts.

The public has lost confidence in the official banking system due to historical issues where currencies were changed overnight while former RBZ leadership raided private accounts. Mangudya still has the burden to restore the lost confidence.

Most Zimbabweans, except those in power and their close associates, are suffering. It has been a long bumpy road of economic problems.

When is the Zanu PF government going to fix the economic malaise? The macroeconomic fundamentals need urgent redress to contain the “price madness”. Otherwise, the suffering by the masses continues, unabated.

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