By Mthuli Ncube| Zimbabwe is on a journey. A marathon. Indeed, sometimes it feels more of a steeplechase. As although the journey has just begun, we have faced a multitude of challenges to overcome already. This was not unexpected. And as responsible economists, you must always prepare to tackle these obstacles.
When
embarking on an arduous journey such as the complete reformation and rebuilding
of an economy, it is however crucial you know what your destination is. We know
what our destination is: It is middle income status. It is prosperity for the
people of Zimbabwe.
But
knowing your destination is not always enough. You must be willing to deal with
those hardships, those challenges, which inevitably crop up on any difficult
journey.
Most
importantly, you must take control of as many factors as possible. You must
have control over your destiny.
This
week, Zimbabwe took back control of its economic destiny.
In
fact, it had always been apparent to us that for true stability, stability upon
which economic growth can be built, our own currency was necessary.
The
multicurrency regime was holding us back. Like a headwind for a cyclist who is
already peddling up hill, the multicurrency regime had left us exposed to the
elements.
In
this case, the element was the aggressive inflation caused by the US Dollar
pricing. Put simply, we had to take our destiny back into our own hands; we had
to take back control of monetary policy to remove that element, and make it up
the hill.
Regaining
control will first and foremost benefit you, the hardworking Zimbabwean. Our
teachers and doctors, our entrepreneurs and cleaners; they don’t earn in US
dollars. So why sell in US dollars?
Prior
to this move, the vast majority of our hard working Zimbabweans were being
discriminated against in what had become a two tiered and unfair economy.
What we had was a
situation whereby there were stable and affordable prices for the fortunate
Zimbabweans who had access to dollars, and a paralysing high cost of living for
the rest of the country. This is not right, and we had to step in.
The
inevitable question posed by many therefore is why didn’t we act sooner?
Indeed, they would be right in noting that the multicurrency regime is not a
new phenomenon.
The
answer however lies once again in our journey metaphor. You don’t trek through
the desert without the necessary preparations.
You
don’t cycle up a mountain without the necessary training. And you don’t run a
marathon (or steeplechase!) without first making sure you are fit and healthy.
Thus
prior to making this big decision, it was crucial for us to ensure that our key
fundamentals were first put in place. The beating heart of these fundamentals
is our national budget.
Once
again it was vital that we gained control over our budget, over our spending;
what economists call ‘fiscal’ control. We decreased spending, increased
revenues and, for the first time in recent memory, the nation of Zimbabwe is
now enjoying budget surpluses.
With
the preparations complete and our body ready for the next stage of the race to
put Zimbabwe back on its feet, we took it upon ourselves to venture past the
next juncture, and move another step closer to our destination.
Abolishing
the use of multiple currencies, and making the Zimbabwe Dollar the sole legal
tender has always been a key component of our transitional stabilisation
programme, and a crucial step in restoring normalcy to our economy.
We
will work closely with our colleagues in the various ministries and the RBZ to
ensure the correct next steps are now taken to guarantee this move is a
success. We must continue to rapidly increase the flow of forex into the
interbank market. But this must not be for the few.
Forex must also be
made readily available to individuals and small businesses across our nation
through organised, regulated, and legal channels.
This
should also include the introduction of a new interest rate policy and a
monetary policy committee.
Despite
the reported complexity of this decision, day to day, not much will change.
Zimbabwean workers will still receive their wages in RTGS dollar and bond
notes, and when they go to the shops, the food on the shelves will be priced in
the same currency.
Government
also guarantees that those who do hold Nostro accounts will of course keep their
access to those accounts in the currency in which it is currently held.
We
therefore continue as a nation on the march forward on our path of progress,
quickening the pace to our destination of prosperity.
We
are under no illusions about the rough terrain we will face. There will be many
more obstacles to face. But by taking back control of our fiscal and monetary
mechanisms, by taking our fate firmly in our own hands, we are one step closer
to reaching our destination.
Hon.
Professor Mthuli Ncube is the Zimbabwe Finance and Economic Development
Minister
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