THE monetary policy presented by the central bank governor, John Mangudya, remains very much the talk of the country, and rightly so because of the ramifications the policy wroughts to the economy and the public in general. It is not a secret that the 1:1 peg for the United States dollar against the surrogate bond note currency was unsustainable, quantified by Finance minister Mthuli Ncube at a breakfast meeting yesterday at $2 billion per year.
That is a costly price to pay for policy failure and intransigence, and the decision to scrap the peg brings a welcome end to a failing monetary policy.
While the larger section of the business community lauded the move, which while expected would not have surprised anyone who has had dealings with successive Zanu PF governments, which have so far valued political expediency more than logic if it had not happened.
Question marks still remain if the move represents the best solution to the country’s deeper economic crisis.
It appears that, for the umpteenth time, Zimbabweans have to deal with a new currency; one called Real Time Gross Settlement dollars. Even in a movie script for the absurd, its difficult to craft something so gleefully ridiculous.
Every self-respecting business person is treating the move with caution, which is unlikely to tamper the demand for black market dollars and ease inflation, unless the official interbank rate, which comes into effect on Monday, rapidly catches up with the unofficial rate of exchange.
It needs no clairvoyant to explain that Zimbabweans have very little trust in the economic management abilities of the Zanu PF government and fears remain that the whole facade could trigger a return to the hyperinflation era.
It could work, but requires utmost discipline from government and for the central bank to keep the liquidity low to keep the exchange rate stable. Even then, President Emmerson Mnangagwa desperately needs to regain public trust, but in the 15 months of his rule since the army forced long-time strongman Robert Mugabe out in a coup in November 2017, he has shown no inclination and even capacity to work for that trust. Brutality by security forces in putting down public dissent has only widened the distance between the new leader and his subjects.
Government efforts must, therefore, include not just fiscal discipline, but convincing a sceptical public that it finally has a solution that has long eluded its predecessors, and that Zimbabweans can look forward without any trepidation and fear for the future.