BY KUDZAI KUWAZA
THE country’s business sector says the year is difficult to plan for given the uncertainty that looms on the horizon, particularly with the country girding for potentially disruptive by- elections.
Zimbabwe’s economic crisis continues to deepen, aided in that predicament by the ever widening chasm between the parallel and official exchange rates.
The auction rate is currently standing at $108,660 against the parallel market rate of $205. The disparity shows it’s ugly face in the fast weakening local unit which translates in the erosion of incomes and the unabated rise in prices of basic commodities.
CEO Africa Roundtable chairman, Oswell Binha said it was not possible to plan beyond the first quarter of next year because of the uncertainty that engulfs the economy.
“The problem in Zimbabwe is that we cannot have long term planning. The furthest we can plan is the first quarter of next year because the variables are just too many,” he said. “This year has been very difficult with complexities in the crafting of policies and exchange rate movement.”
Binha said the dithering by the government on whether the country is dollarizing or de-dollarising only worsened the uncertainty.
He said the by-elections next year to fill vacant parliamentary and council seats could also increase the unpredictability.
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“When the government gets into election mode the economic situation becomes complex and volatile and we only hope that this will not deter business activities next year,” Binha said.
Zimbabwe National Chamber of Commerce chief executive Chris Mugaga said the currency framework and the upcoming by-election would be vital to the performance of the country’s economy.
“I think the year 2022 will depend on the currency framework – on whether we adopt the United States dollar or the local currency,” he said. “By elections are a threat. The political temperature must be controlled for the sake of the economy’’
Mugaga said he did not think that the Covid-19 pandemic would have a major impact on the performance of the economy next year.
Fears of fiscal indiscipline by the government in the election period is a major concern in the business sector according to findings in the Inaugural State of Industry and Commerce Survey 2021 launched recently.
Business executives fear that government spending could spiral out of control as the ruling party it goes all out to win the elections to be held in the first quarter of the year and stoke inflationary pressures in the economy.
Economist Prosper Chitambara said the state of the economy in the new year was “very unpredictable” due to factors such as the Covid-19 pandemic and elections.
“There is a lot of uncertainty around the economy with Covid-19 and the by-election next year,” Chitambara told Standard business. “Our politicians are already in election mode and this could put pressure on government spending next year due to populist measures as it tries to ingratiate itself with the electorate.”
He said government spending during the election period increased money supply substantially and put pressure on the exchange rate which was already a major threat to economic stability in 2022.
Even Finance minister Mthuli Ncube has warned that unpredictability of the exchange rate could be a major threat to achieving the 5,5% growth that government has forecasted for next year.
“Potential risks to the above projected growth include the uncertainty in the future path of the pandemic and exchange rate volatility, which may contribute to high inflation,” Ncube said in his 2022 National Budget statement.