Cash crisis: Mangudya, Chinamasa being 'dishonest'

EDITOR — The Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya and Finance minister Patrick Chinamasa have not been honest to the people of Zimbabwe on the true causes of the current cash crisis and the real motive behind the introduction of the questionable bond notes.

It is shocking that it has taken a few months since assumption of office for Governor Mangudya to expose himself fully to the watching eyes of the Zimbabweans and the international community.

To us it is clear that the primary cause of the cash shortages is that the government has literally been raiding the Real Time Gross Services (RTGS) balances at the central bank to pay for its own recurrent expenditures.

Zimbabwe’s wage bill is clearly unsustainable and is driving a major budget deficit, which we estimate to be 30 percent of the Gross Domestic Product.

It is our belief that the hole in the RTGS balances is as huge as $2 billion and has left Chinamasa and Mangudya with no choice but to commit suicide through the measures announced on May 4, 2016.

Indeed, as our colleague, Eddie Cross has been saying, the government has been issuing Treasury Bills (TBs) like confetti as if there is no tomorrow.  These TBs have been honoured from the RBZ.

In our view, Chinamasa and Mangudya must stop lying to the people of Zimbabwe and the International Monetary Fund.

Vince Musewe

PDP Secretary for Finance and Economic Affairs

 

Comments (2)

This the issue. The Government has used depositors' funds. We have been saying this. In layperson terms, you can not cause a cash crisis by using what is yours. What we have is a situation where the government has used depositors' funds to meet its insatiable appetite to spend, and now the real depositors need their money and the money is no more. We have warned International Banks and will continue to warn them again that this time around, we will sue them in their home countries for working in cahoots with the rogue ZANU PF thugs to defraud depositors of their hard earned money. They did this during the pre 2009 period and they got away with it. This time they will face the music. Watch out.

Zvichapera - 16 June 2016

Do we really have a cash crisis, or its a manufactured doctrine for government to overstep once again by robbing the hard earned funds of people. personally I view it is misinforming the public to benefit from the outcome. Why I say we do not have a cash crisis (i.e before the annunciation of the coming of bond notes) is because the amount of cash circulating in the local market is inn equilibrium to the value of goods & services being produced and available. Clearly no reason for us to have extra cash as that will not necessarily increase the value of goods and services but may help prop up inflation. In that instance It might be viewed as government trying to regain the monetary policy tool of Keynesian Economics. But , we were perfectly okay in the free market with no regulator. Zimbabwe is a good bad example to indicate that having more money in circulation does not in turn create wealth for the people because paper money's intrinsic value is basically zero.

Hayek - 20 June 2016

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