AMHVoices: Spare us from bond note voodoo economics

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We strongly suspect that the bankrupt and faction — ridden Zanu PF regime harbours a very sinister motive pertaining to the introduction of bond notes

The speed at which the Zimbabwean financial authorities are trying to re-jig the Zimbabwean dollar into the economic pitch without giving themselves enough time to scroll down the pages of their economic conscience is not only an act of economic genocide, but also a classic display of what finance specialists call voodoo economics. After carrying out a series of economic post-mortems on the logic of recycling the Zimdollar code-named bond note into our dependent and not independent economy, I was left curious on whether the authorities would still have the guts to continue issuing out the bond notes given the devastating effects that the simple announcement of introducing the bond note has had on the Zimbabwean economic landscape.

BY ABNEL TAYLO RUKARA,OUR READER

ZimDollar during the hyper-inflation 2008
ZimDollar during the hyper-inflation 2008

Surprisingly, I zipped up my curiosity when I heard the monetary authorities reiterating that bond notes were warming up to substitute the already scarce American dollar. Yes, from a real economics perspective, the bond note will simply substitute the American dollar from the market in what economists call Gresham’s Law, whereby, abundant and worthless money drives out scarce and highly-valued currency from the market. Figuratively, this is a situation when lemons drive oranges out of the market.

Perhaps our monetary authorities are of the view that the introduction of the bond note will ease the prevailing liquidity crunch across the financial divide, but the outcome of the move will present a hodgepodge of economic trauma worse than that of the year 2008. The fact that our agro-based economy imports almost everything from maize to used clothes shows our local industries are performing to the nearest none. The fact that the government is trying to use the controversial Statutory Instrument 164 to ban the importation of a wide array of commodities from abroad is a true signal that our local products are far less competitive both locally and abroad in all aspects from price down to quality. With that reality, it means that any attempt to issue out the Zimdollar or Zim bond, as they like it to be pronounced, will suffer a premature miscarriage mainly due to demand-pull inflation. Thus, there will be high demand for foreign currency and to ease the demand, forex dealers will be forced by the market forces of supply and demand to inflate the exchange rate above normal. This will then force the prices of commodities to go up. Furthermore, the government will then be forced to increase the salaries of civil servants, so that they live at par with the economic demands. In this situation, the monetary authorities will be locked within the two horns of a dilemma to either break through the thin fabric of the $200 million Afreximbank forex back-up support, to print more notes so as to support the civil servants’ salaries, which are claimed to be consuming more than 80% of our fiscal budget, or to call back the retired devil of price controls, which may ground businesses to a halt, as what happened in 2008.

So the genealogy of this mode of voodoo economics is a direct product of the tragedy of gigantic proportions guided under assumption that by periodically re-jigging the Zimbabwean dollar into the economy, without the support of a viable local industry, the economy will grow. Surely our $10 billion economy has no appetite to digest any introduction of local currency and it will be forced to vomit if forced. In fact, we should not be victims of the fallacy of composition, which says that because bond coins survived, then bond notes will also survive. Actually, it is high time that the nation did a post-mortem on why some dollarised economies, like Panama, are not rushing to introduce their bank notes, when they have actually used their coins for long.

One could wonder why the nation is parading a red carpet for the jamboree of voodoo economics in our ailing economy, which needs proactive rather than reactive response.

It should be submitted that finance is a delicate heart of any economic system be it command economy, free market economy or mixed economy, and it needs cautious protection by the ribs of policy consistency and investment promotion activities. Yes, there should be policy consistency in the sense that both the monetary and fiscal policies of last year claimed that the Zimdollar would not see the sun, but within of six months, it turned otherwise. Can the financial authorities please spare us from this unhygienic mode of voodoo economics?

8 COMMENTS

  1. My Co-Worker’s step-sister made $13285 the previous week. She gets paid on the laptop and moved in a $557000 condo. All she did was get blessed and apply the guide leaked on this web site. Browse this site….

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  2. We told ZANU PF thugs even before the 2007/8 crisis that their ideas are stone age ideas. They might have been graded brilliant then, but in this 21st century, they are burning the country. They created a situation where someone would literary enjoy a one month holiday with a budget of just US$10, through burning and this eventually burnt the country to its knees and they had to run all over looking for Tsvangirai to bail them. Now they want to tell us that the same stone age conceptions will help, although it is clear to anyone that this will burn the country beyond its knees this time around. For how long should people allow a rogue ZANU PF government to continue ruining their lives. We worked for almost our working lives and woke up to see that all we had kept had turned into nothing, including insurance policies and other investments. We had with some resilience started all over and they want to destroy us again. It appears ZANU PF thugs are there to destroy, kill and loot only, as they continue to push policies which are destructive and insensitive to the plight of the people of Zimbabwe. Surely this time they will not succeed. This is surely the endgame.

  3. This is a serious crime to the gvt as people lets stand up and boycott this evil method lets wake up all Zimbabweans and stop the erosion of our pensions and insurance we have being soft for so long lets fight these destructive policies once and for all, and lets call a spade a spade and fight this evil system and let it die once and for all.I bet with the help of GOD not this time will happen to our poor Zimbabweans GOD is on our side what ever plans they planning will fail.

  4. Zanupf a party of thugs who blame others for their own failure i advise all zimbos not to buy Chinese products and stop buying from zanupf member shops stop buying grace mugabe s milk boycott where there mouth is all universities and colleges chase zanupf minister sons and daughter let them enjoy what their father has done chase the out even their buses even trucks stop doing business with zanu especial Chinese are empowering this dictator Chinese has stolen billions from zim Stop doing business with Zanu Pf

  5. My first job out of High School was at St Paul and over the next 5 years Iearned so very much. Seeing the hospital torn down tears a small piece of my heart out. The Daughters of Charity and the doctors and staff of St Paul Hospital will always be with me……
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  6. My buddy’s step-mother makes $81 an hour on the laptop . She has been fired for 9 months but last month her payment was $14461 just working on the laptop for a few hours. site link….

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  7. The result of experimenting is success or failure not both. Andisati ndambonzwa vachitaura nemutauro yedu kuti vatsanangure the concept yekuisa bond note. Ndongonzwa vachingotaura nemutauro hanzi ndewe economics vozongopedza nekusvora mhomho yeZimbabwe kuti atisi kunzwisisa ma bondnotes. Nechirungu chenyu ichochi chamunotsanangura nacho. Isu tonzwisisa. Ini ndoda kungiziva kuti Mari yevanhu irimuma banks inenge ichizoshevedzwa ichinzi US$ here kana kuti Zim$. ko ma bond note acho inga makati ayisi Zim$. Ndingazonyepe imi ndimi nunoziva asi yeyi

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