“We have been assured Treasury wants to pay them but there is no money. There is communication, but we have not been given any timeframes”, said Clerk of Parliament Austin Zvoma.
PAINONA with TAPIWA GOMO
He was responding to questions as to when legislators from the previous Parliament will have their fees arrears made good, some seven months after the life of that Parliament.
There will be no money for some time.
According to Joram Gumbo, the Zanu PF’s parliamentary chief whip the “government now owes $5,5 million to both the 7th and the new 8th Parliament”. “Even companies” he added in despair, “cannot pay their workers”.
Grave are the republic’s problems. In a lecture at Zimbabwe National Army Staff College, Finance and Development minister Patrick Chinamasa surprised his audience by claiming that Zimbabweans had “devalued the United State dollar”.
He lamented the cost of money blaming some of the country’s problems on this handicap.
It may have seemed like it, but claiming to have masterminded dollarisation as a solution to hyper-inflation is not the brightest of things. Accepting that it was inevitable is something else, and it might have allowed the nation to make timely remedial action before the toxic nature of dollarisation became all too apparent.
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For a nation like Zimbabwe to dollarise is like First World countries going back to the gold standard; an inflexible arrangement they fled from many decades ago. Locked into a “gold standard” of any sought, the West would not have worked its way of the 2008 global financial crisis.
No “quantitative easing” or loosening of monetary policy would have been possible. Similarly fiscal stimulus by running budget deficits funded on shore to increase public capital expenditure, and thus stimulate an economy, would have been a pie in the sky.
Financial repression, as a tool to boost economic growth in emerging and frontier economies, would also be impossible. Zimbabwe finds itself without all of these monetary and fiscal tools to help its economy, in a global environment where infinitely stronger economies when compared to Zimbabwe such as Japan, China and the United States have had to rely on one or more of the above mentioned fiscal and monetary tools. The call for a national currency couldn’t be stronger.
Already, with the rand registering a steep depreciation against the dollar, imports from South Africa have become cheaper while exports from Zimbabwe have become less competitive. The trade deficit is bound to rise alongside company closures and job losses. This in turn leads to a reducing tax base, a more intense liquidity crisis and an already cash-strapped Treasury on the brink of failing to honour its public payroll.
And yet all of this was predictable, but the times were setting the agenda. Politicians, almost as always, had their own interest and not that of the nation. Of course they will deny it if you ask them, but evidence says otherwise.
They could have adopted the rand as anchor currency, but they did not, even though the then South African President Kgalema Mothlanhe seemed well disposed to the idea.
Adopting the rand, and scrapping the (anti-?) indigenisation laws as regards either intra Africa or intra-Sadc investment could see far cheaper capital flow into Zimbabwe.
A Sadc monetary union should be, being driven by Zimbabwe. Cross-border trade, whether it is in labour, goods or services should be encouraged as much as possible.
All countries in the region, South Africa included and virtually all industries share one major weakness: small, weak and adversarial markets. South Africa’s Finance minister, his Zimbabwean counterpart and their international relations / foreign affairs colleagues ought to be championing integration.
It is a shame for the region that every time China’s investment in infrastructure drops the African sub continent’s economies catch a cold.
Without Sadc monetary union or the rand the cash strapped Government has little choice but to print its own Zimbabwe currency. However, as yet it does not have the capacity to do so without regressing into hyper-inflation.
Government non productive expenditure is simply too large for the economy.
Radical austerity measures, which could trigger a coup and or civil strife, and for which central government neither has the mandate nor the political will to carry out, given its impractical manifesto, are a condition precedent.
But a managed parallel run in which small denominated coins are introduced could assist as “tokens” for change going forward.
The strategy will buy the beleaguered government time to overhaul some of its self-defeating policies. The face value of the minted amount has to be kept low, perhaps below a quarter of the money circulating in the economy in the first year.
That could see government Salary Services Bureau issue two pay slips one in US$ and the other in Zim dollars for those earning above the poverty datum line with the aim of reducing the proportion of salaries to revenue collected to below 50%. The private sector would be allowed the same option.
Industry too, which is finding itself uncompetitive would price its goods in both currencies or in the local currency depending on its US$ requirements.
With confidence and or desperation the local currency if properly managed, will gradually take root.
But this is no substitute to growing the economy and in particular exports.
For that a paradigm shift in the political and legal landscapes is needed. Is it a challenge too big for Zanu PF? [email protected] or [email protected]
