Question: As the country continues to lobby for the removal of sanctions, can you briefly explain how sanctions have affected the economy?
Answer: The impact has been severe and anyone who thinks that sanctions are not harming the economy is surely not telling the truth. We have had many companies directly affected and the examples are too many to mention, like Olivine which had a loan intercepted through the United States’ Office of Foreign Assets Control (OFAC). In the financial sector, banks such as Standard Chartered Bank and CBZ have lost money directly as a result of sanctions. We can go on-and-on.
But, as a Finance Minister, I want to see sanctions go. What is really important is that I am driving the economic reform agenda and we are getting the economic fundamentals right so that we can present a case for the lifting of sanctions.
We have achieved a budget surplus. Other reforms include doing away with laws such as AIPPA (Access to Information and Protection of Privacy Act) and POSA (Public Order Security Act). We are also working on the Police Act, the Citizens Bill, all of which are part of the progress on reforms.
I do not know any country in the world that has achieved the reforms that we have accomplished in just 12 months. And we have done this without any international monetary support. We have also done these reforms despite the shocks of a severe drought and a devastating cyclone.
Our reforms are real and paying off. One example is that the World Bank upped our rankings on the Ease of Doing Business.
Q: What does this ranking mean to the ordinary Zimbabwean?
A: What happens is that when you move up the rankings, global investors start to see you differently. It improves your global ranking and it reduces the risk premium that is associated with the country.
The benefits are enormous going forward. For the ordinary person, it is about new jobs and business opportunities that will be created.
I will be bringing forward a paper to Cabinet to see other areas we can continue to improve and focus on in the next two to three years so that Zimbabwe continues moving up the ladder.
Q: You have said this year Government will end austerity. Please unpack what this means.
A: Austerity came with the realisation that we were running a huge budget deficit. The monies were being spent in an unstructured way. We have reined in on that by reducing Government expenditure and cleaning up the systems to ensure that these are audited properly.
We have also improved on revenue collection with Zimra ( Zimbabwe Revenue Authority). So, because of austerity, we have had very successful fiscal consolidation. That is why in the first seven months of the year, we ran a budget surplus. We want to take that surplus as a platform for productivity and growth.
So away from austerity, productivity is the theme in the new Budget that we are going to be announcing in 2020. So it is about growth and productivity and improving the environment for ease of doing business.
Q: What are the specific areas that you are talking about in terms of production?
A: We are now saying we have adopted a successful model for agriculture, working with the banking sector, because we know that the banking sector will do a thorough job in assessing who is productive in farming. So we know that we have got an in-built control and collection mechanism for paying back. We know that we are going to give the money to someone with a track record of production.
Q: On industry, what is the plan?
A: I will have a Budget on supporting productivity within industry as a whole. Secondly, also supporting productivity in the rural areas where there is a possibility for investing in the rural areas, we will give an incentive for that.
But also, I want to focus on job creation. In the Budget, I will have a proposal to reward the creation of new jobs.
Q: The local currency has been losing value even after the introduction of the interbank foreign exchange market. What is your comment on this continued decline in value of the local unit and its attendant harmful impact on the economy?
A: It is imperative that we maintain a competitive currency. Where it stands now, the currency is competitive within the region. It is at 1:1 with the (South African) rand and not far from the (Botswana) pula and the (Zambian) kwacha. We did not have this before. We want to protect the currency and make sure that we have a stable currency. By the way, our currency has helped to improve competitiveness of our exports because when we were 1:1 with the US dollar, we were not competitive.
Q: Some critics say you have failed to deal with cash shortages. What is your plan to address this?
A: We are going to be issuing more notes. We are also going to improve the quality of the interbank market and deal with the cash situation and build confidence in the banking sector.
It is a holistic approach and we should make sure that we do not allow liquidity growth to run away or to increase unnecessarily. We should also make sure that the budget deficit stays within the well-contained levels so that it does not become a risk to the value of the currency. So it is a package that we are going to throw and we are doing that.
Q: You have spoken about issuing more notes. Can you expand on this? Are we going to have new dominations apart from the $2 and $5 notes that are already circulating?
A: There is no new currency or fresh currency that will be coming. All we are talking about are additional notes on the back of a new currency that we launched in June, when we made the Zimbabwe dollar the sole legal tender. Prior to that, we had done 80 percent of it, when we said we had the RTGS dollar.
-State Media