IN today’s front page lead story, we are carrying a story titled Exchange rate bolts.
In the story we hear that the country’s exchange rate is stampeding almost out of control due to economic pressures, among them a tight tax regime.
This is very worrying, especially given the journey we have travelled so far, having been assured by our monetary authorities every other day that our currency, the Zimbabwe dollar will never ever again face the embarrassment of 15 years ago when it was officially pronounced dead in February 2009.
To clearly bring our bone of contention to the fore we will wind back five years to 2019 for some context.
On June 24, 2019, we woke up to news, through Statutory Instrument (SI) 142 of 2019, that with effect from that day, “the British pound, US dollar, South African rand, Botswana pula and any other foreign currency whatsoever shall no longer be legal tender alongside the Zimdollar in any transactions in Zimbabwe”.
This was supposedly to strengthen and protect the currency from past evils which haunted it out of circulation.
In introducing SI 142 Finance minister Mthuli Ncube told the nation that it was, indeed, ripe to reintroduce the Zimdollar because the country was enjoying “fiscal discipline of the highest quality”. He even boasted of the country having no budget deficit, but “a surplus”.
In his own words, albeit abridged, he said: “If you look back to 2008, it is the exact opposite. We had no fiscal discipline, we had no money sector discipline. The budget deficit was huge, rising and uncontrollable and was being monetised through the printing on money. We saw many zeros, we removed some and they came back. We do not have that at the moment, we have the right fundamentals to support the domestic currency.
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“This is not 2008 when we had fiscal indiscipline and monetary sector indiscipline. We are far from that, the conditions are different, the policies are different … I assure you that we are not in 2008.”
Fast forward, five years on, the dreaded zeros — which haunted the Zimdollar out of circulation in February 2009 and saw the currency being declared dead for 10 years before being resuscitated in February 2019 — are back to haunt the seemingly cursed currency.
Trading are 1:1 with the greenback in February 2019 the currency is currently trading at about 1:ZWL$13 000 on the parallel market, which apparently seems to run the show in Zimbabwe, while on the official market it is trading on a conservative 1:ZWL$7 000.
Be it on the black or official markets, those are an awful lot of zeros for a currency with life in it.
We shall not even bother to talk about the many twists and turns over the past five which saw the SI 142 becoming obsolete and the currencies which were banished in June 2019 being welcomed back with open arms and their escapade within our borders extended until 2030.
What we wish to briefly ask our esteemed Finance minister is: What is the future of the Zimdollar? Dear Minister Ncube, what exactly is mauling our dear lovely currency if there is fiscal and monetary discipline in our economy? Lest we err in our reportage, can Mr Ncube please enlighten us on what exactly is driving the exchange rate out of control. Maybe we should also ask: Has the economy not dollarised already?
While we wait for his response, we would, however, wish to humbly point out that only the truth will set us all free.
