Govt panics as wheels come off

HARARE - With Zimbabwe’s economy continuing to die — as manifested by rising poverty levels, worsening job losses and severe cash shortages — the government is showing signs of panic, amid fresh warnings by experts that the country is headed for an economic disaster akin to the meltdown of 2008.

This comes as the Reserve Bank of Zimbabwe (RBZ) has set the maximum limit for cash back facilities by retailers and wholesalers at $20, as authorities desperately try to mitigate the country’s worsening cash crisis which is forcing long-suffering Zimbabweans to spend hours at banks queuing for their money.

“Any cash-back facility made available by retailers and wholesalers shall not exceed an amount of $20.

“The Reserve Bank shall collaborate with wholesalers, retailers and their associations to ensure the adequate provision of Point of Sale (POS) machines in order to enhance the use of plastic money for transactions,” the under-pressure central bank said on Thursday.

But a government source who spoke to the Daily News yesterday said the country’s bigwigs were “panicking” over the ever-deteriorating state of the economy.

“I won’t lie to you, we are all panicking. While it’s clear that the Reserve Bank is doing its best, unfortunately our problems are deeper than the central bank’s mandate, which is why they appear to be treating the symptoms and not the causes of the problems,” the senior official said.

An executive with a retail chain, who spoke on condition of anonymity, also criticised what he called “panicky, knee-jerk” policy pronouncements by the government that he felt would not mitigate the dire situation obtaining on the ground.

“We have now reached a situation where we do not know whether to laugh or cry. I mean, what kind of policies are these where we are compelled to bank our money but can’t get this cash back when we need it?

“Our biggest fear is that this is more and more looking like the nightmare of 2008 . . . and while I’m not one of (People’s Democractic Party leader Tendai) Biti’s admirers, I think he was correct when he described our economy as a Ponzi scheme (a fraudulent investment operation),” he said.

On its part, opposition leader Morgan Tsvangirai’s Movement for Democratic Change (MDC) said the RBZ should “simply own up and declare that the prevailing cash crisis is beyond its control”.

“The wheels have totally come off,” MDC spokesperson Obert Gutu told the Daily News yesterday.

“The bond notes experiment has been a spectacular flop. The chickens are coming home to roost.

“What Zimbabwe needs and needs very urgently, is a lasting solution to its long standing political and socio-economic crisis.

“These stop-gap measures like limiting cash backs to be paid by retailers simply won’t do. We need to cure the cause of the disease, not just rushing to suppress the symptoms,” he said.

PDP spokesperson Jacob Mafume alleged that senior government officials were “the biggest hoarders of cash” in the country and not ordinary Zimbabweans who were targeted by the new monetary measures.

He also said the RBZ was “criminalising what is ordinary economic activity in other countries”.

Economist Kipson Gundani said the new cash back limits showed that Zimbabwe had entered “an era of cash rationing” — adding that he did not expect the measures to end the country’s severe cash shortages.

Mfundo Mlilo, a governance and public policy expert, also said the cash back limits reflected the fact that the country’s cash crisis was worsening.

“The money supply situation is worsening and this will negatively affect aggregate national demand . . . It’s an ungodly act at Easter,” Mlilo said.

Other economists warned that the cash crunch would pull down Zimbabwe’s gross domestic product (GDP) growth and spawn a recession, with companies and traders relying on cash set to be worst affected.

Economist Prosper Chitambara said the new regulations were a desperate measure to curb the country’s worst financial crisis in eight years, but would not succeed.

“Definitely, this won’t address the problem . . . this is a confidence issue, as there are uncertainties in the market. People have no confidence in using the formal system,” he said.

In the meantime, Zimbabwe’s worsening cash crisis has forced banks to reduce further their daily withdrawal limits — in addition to suspending dispensing money through Automated Teller Machines (ATMs).

This prompted analysts who spoke to the Daily News recently to say that this confirmed that the local economy was dying and “hurtling towards total collapse”.

It also comes as most banks are now disbursing a maximum of $30 dollars a day, down from their usual $100 — while those that had capped the maximum withdrawal limit at $500 a week have pulled this back to $200.

The cash shortages are also continuing to worsen despite the recent opening of the tobacco marketing season.

Economic advisor to President Robert Mugabe, Ashok Chakravarti, told the Daily News last week that the escalating cash crisis was a result of “long-term problems” that came after the country opted to have one of the world’s strongest currencies, the US dollar, as its anchor currency.

“We have close to $6,5 billion in deposits and at the end of January we had a little over $300 million in cash circulating.

“Under such circumstances, it only makes sense that we have shortages. Do not blame the banks, it is not their fault, they are only looking for a coping mechanism,” Chakravarti said.

He recommended that the government should adopt the South African rand and ditch the dollar.

“I have said this before, we need a weaker currency. The weaker, the better for us. As South Africa has just been downgraded, this is an opportune time. What we just need is a weaker currency,” he added.

Veteran economist John Robertson said the cash problems were going to persist until the government urgently fixed the country’s economic fundamentals.

“This has been going on for the past year and in my view, the situation is not likely to improve in the near future because economic fundamentals remain the same.

“Government’s wage bill still makes up the majority of deposits and as soon as those deposits are recorded, civil servants want to withdraw the money. But there is essentially no money in the system . . . Not even tobacco earnings will save us this time” Robertson said.

The cash shortages come as there are growing fears that the country’s economy may soon hit the disastrous lows of 2008 — as bond notes continue to lose their value against the United States dollar, with the coveted greenback now almost completely unavailable on the open market.

At the same time, economists have also told the Daily News that poverty levels in the country are skyrocketing, with average incomes now at their lowest levels in more than 60 years — and with more than 76 percent of the country’s families now having to make do with pitiful incomes that are well below the poverty datum line of more than $500.

Economists have also warned of a fresh round of sharp rises in the prices of basic goods, including foodstuffs — as the US dollar continues to vanish from the market, leading political analysts to worry about renewed civil unrest in the country.

Biti, who is the country’s former Former Finance minister has also said that Zimbabwe is heading for an economic calamity which would see the government formally reintroducing the Zimbabwe dollar which has been decommissioned.

“They are already printing what we call Zollars, an amphibious creature which is half Zimdollar and half US dollar that is reflected in treasury bills and bond notes which have no cover.

“This is reflected in unfinanced RTGS (real-time gross settlement) and debit card transactions. We have created hot air, and as a result broad money supply, M3, must be frightening. It must be close to 60 percent of GDP. We are heading straight to hyperinflation.

“Zimbabweans must prepare for a long winter of despair. It’s in Zanu PF’s DNA to print money and just spend it as if there is no tomorrow. The flood gates are open and will drown us. It’s just a question of time now,” Biti said.

Comments (13)

ZANU pf leaders are really not fathers but murderers, they want everybody in zim to die of poverty so they can leave it alone

chahototo - 15 April 2017

Hynas destroyed agriculture, destroyed mines, destroyed industries, persistently crushed banking system. But funny enough, they still refuse self assasinating socio-economic system. Citizens wake up!!!

Hynas Are Ruling - 15 April 2017

These guys will only run away when the economy is dead dead, nothing running

thieves - 15 April 2017

No worry His Excellence Robby will come with command finance very soon. Mari tichaita yekupurura pamiti semadora.

Masamba Akareyo - Tanganda - 15 April 2017

True picture if ZANU-PF is now just about to show off in its full colours. They were clearly told that they cannot rig the economy. As it is they are not in a position to admit that they are failing to run the country. Its not long before everything comes to a stand still. The problem is with the government as they use wrong policies coupled with their never ending corruption and also belief that no one can do better than them. It would be mere lucky if we get to 2018 elections before a mass revolt as it is their right in showing their distrust in the current government.

Pythias Makonese - 15 April 2017

Quite sad and terrible. It now needs divine intervention for a lasting solution to the country's problems. With God, nothing is impossible.

Simbiso - 15 April 2017

1. Zanu PF doesn't learn from past madness. They are a bunch of monkeys masquerading as leaders. 2. Zanu PF knows they are clueless but they have foolish pride. Who in their right minds would want to continue doing the same things for 37 Years, failing and trying the same things again and again expecting different results? 3. Zanu PF does not want anyone to take over from them because their successors will resuscitate the economy and it will be clear to Zimbabweans who exactly was being incompetent.

NipIsrael - 15 April 2017

1. Zanu PF doesn't learn from past madness. They are a bunch of monkeys masquerading as leaders. 2. Zanu PF knows they are clueless but they have foolish pride. Who in their right minds would want to continue doing the same things for 37 Years, failing and trying the same things again and again expecting different results? 3. Zanu PF does not want anyone to take over from them because their successors will resuscitate the economy and it will be clear to Zimbabweans who exactly was being incompetent.

NipIsrael - 15 April 2017

who are these idiots to tell me how much I withdraw it is my money I want MY MONEY, THAT SO CALLED LEADER can take millions with, whose permission does he ask, stop using my money. I"m tried of him and his so called wife, RBZ boss tell him to galavanting stay at home tell is party to pay for his trips. Why must I pay collect from the stupid zanu pf youths.

ALEXIO - 16 April 2017

The root of the problem is both simple and obvious - THEFT. If we put money into a bank, the only reason we can't draw it out, is because someone else has - the hyenas of ZANU PF. First they steal all the real money from genuine exports in the RTGS accounts, and replace it with Treasury Bonds. Treasury Bonds are simply IOUs from government - they have no backing whatsoever. The real money from exports, earned by the last honest, productive people still in Zimbabwe, is simply stolen by ZANU PF to pay their supporters. The exporters then can't get real money to keep their businesses going, and the whole thing is about to collapse like a house of cards. The answer is very simple - REMOVE THE THIEVES FROM POWER. The key here is the rank and file of the 'security forces.' The day ZANU PF cannot pay them, and they defect, the game is over. It is shameful that they have supported the thieves in power for so long. And what for? For their pitiful and delayed salaries . .

DAVID WHEELER - 17 April 2017

... remove the thieves from power OR stop banking your money, lets see if they can catch you and what the charges will be.

Sagitarr - 19 April 2017

they do thegga

gunju - 19 April 2017

I'M GLAD THE LORD GAVE ME THE WISDOM SINCE 1980 NEVER TO VOTE FOR THESE GLUTTONS.

Vusumuzi wako Mange - 25 April 2017

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