Editorial Comment
WHILE we are very much ready to be schooled and guided on what could be the best solutions to the challenges our economy is currently facing, we are of the strong conviction that the solutions to our nagging problems largely lie within the confines of our borders.
We understand and fully appreciate the Reserve Bank of Zimbabwe (RBZ) and the Finance ministry’s concerted efforts to stabilise prices and hopefully pull them down to ameliorate the situation facing the majority of long-suffering Zimbabweans, but we believe our leaders could be looking too far in foreign lands for a solution.
We are extremely concerned by the continued borrowing from foreign banks, with in mind the recent US$500 million facility, purportedly to help stabilise prices.
Basic economic laws tell us the following: “The law of supply states that the quantity of a good supplied (that is, the amount owners or producers offer for sale) rises as the market price rises, and falls as the price falls. Conversely, the law of demand says the quantity of a good/service demanded falls as the price rises, and vice versa.”
So, in our situation, the price madness is responding to a serious mismatch and deficit somewhere in our economy. It is a fact that we have not been productive in a very long time, and this has played havoc with the laws of supply and demand.
We have not produced enough to sell to raise hard currency and we are not convinced that pumping millions, even billions for that matter, of borrowed money into the market will help anything. It will only serve to increase our debt headache.
Our curiosity is also raised when monetary authorities are evasive on the origins of this US$500 million they are drawing down. We have only been told that it is coming from “international banks”. Which international banks are those?
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Our minds then begin to wildly search and some of us end up wondering whether this US$500 million facility is the same as the US$500 million nostro stabilisation facility that we were told of in October last year, which was also confirmed by the African Export-Import Bank?
We were informed back then that the main goal of that facility was to secure payments for essential imports and to promote exports, diaspora remittances and foreign currency deposits.
If this is the same facility, why are the monetary authorities being so secretive about it? If it is the same facility, then we are afraid to say that it will have no effect at all in stabilising our prices.
Our economy remains a bottomless pit as long as we are not producing and as long as the little we are earning from our paltry exports is not properly accounted for.
Companies and individuals will simply draw down on the facility to import goods and services which are all consumed locally. In a matter of weeks, they will come back to the RBZ to ask for more.
If we were productive and had generated that US$500 million from our own sweated exports, then the RBZ would simply wait for more to come from more exports and dish it out.
Sadly, this is not the case. We are presently going around the globe with a begging bowl, which is hopelessly unsustainable. It appears as if our leaders have run out of clues at a time when many have reached the end of their tether.
