ED claims economy is recovering

HARARE - President Emmerson Mnangagwa’s, spokesperson, George Charamba, has claimed that the economy is recovering, suggesting the ongoing cash and fuel shortages were symptoms of an upsurge in purchasing power arising from a growth streak likely to continue thanks to improving domestic demand.

This comes as the liquidity situation has escalated to such an extent that ATMs are empty and banks only allow customers to withdraw $20 in so-called bond coins a day.

This means people have become unproductive, wasting their days away queuing in front of banks.

This also comes as most service stations in Harare have run out of fuel, with prices marginally rising, amid a worsening economic crisis.

Long queues have formed at the few outlets that are still selling it.

The few retailing the fuel are rejecting debit cards, preferring cash or mobile money.

So bad is the situation that the Reserve Bank of Zimbabwe (RBZ) has been forced to double weekly foreign currency allocation on fuel imports to $20 million.

Central bank governor John Mangudya claimed the fuel situation will return to normal soon in the wake of monetary authorities doubling weekly forex allocations for the commodity imports.

The Zimbabwe Energy Regulatory Authority (Zera) has claimed the shortage of fuel in Harare and other parts of the country has been caused by high demand of the commodity, which is putting pressure on prices.

While Mnangagwa has claimed at least half of the money estimated to be stashed abroad by individuals and firms had been returned after the end of a 90-day ultimatum, the cash shortages have persisted.

Charamba said the return of the cash after a three-month amnesty for the return of public funds illegally stashed abroad was never meant to address cash shortages.

“You are linking two things that are unrelated,” Charamba told the Daily News in an interview. “There was never a presumption that the recovery of that money was a panacea to cash shortages for the simple reason that you are looking at the fact that a key explanation to cash shortages that we are facing has to do with the upsurge in purchasing power arising from recovery of the economy.”

Asked if he believed the economy was recovering given the worsening impact of the currency shortage which was no longer limited to everyday consumers but has seeped into other sectors of the economy, he retorted: “Yes.”

He claimed “people are demanding more goods and services because there is a recovery ye economy.” He said the rate of the economic recovery was evident.

Asked if he believed the impetus of the supposed economic recovery was from November developments, when Mnangagwa was sworn in after a de-facto military coup that forced Robert Mugabe to resign, he said “its been a whole host of issues, including the recovery.”

“Inga ndimi muri kutipa wani ma figures on the capacity utilisation iri kuitika mu industry, and with that capacity utilisation, comes greater employment, with greater employment comes ma transfers of earnings away from companies to individuals which is why you notice that the demand for goods and services in this country is correspondingly rising in relation to the recovery of the economy, handiti.”

“So if you look at the $500 million, I mean that’s a pittance,” he said referring the president’s statement that out of the $1,42 billion estimated to be illegally kept outside Zimbabwe, $591 million had come back to the country.

He said there was no way that meagre sum could have addressed cash shortages.

“Its a miniscule in relation to the pace, the manner in which the purchasing power is transferring on to the citizen,” Charamba told the Daily News.

“So, really, rather than seeing it as a problem, isusu kuno ku government we don’t moan over cash shortages, the same way we don’t moan over fuel shortages, or power shortages.”

Asked if the move by the Reserve Bank of Zimbabwe (RBZ) to double weekly foreign currency allocation on fuel imports to $20 million was not a sign of a crisis, Charamba said the increased demand for fuel was a sign of a recovering economy.

Zera chief executive officer Gloria Magombo said last week since the coming in of the new dispensation, demand for petrol increased by over 20 percent and that of diesel by over eight percent in the first quarter of 2018 as compared to the same period in 2017 based on the consumption statistics captured by agency, prompting the RBZ to increase allocations.

Charamba said: “Doubling allocations was for two basic reasons, the destabilisation of international fuel prices, thats the first factor.

“But for me that’s outlandish in the sense that its too distant. I’m not dismissing it as a non factor, I’m saying its too remote a factor in terms of the local calculus. What is key for reading this economy is the fact that the demand for fuel has escalated.”

Asked if he does not believe that the Zera claims that fuel demand has increased by over 20 percent since Mnangagwa came to office was incredible, Charamba said: “Can I give you a good way of reading the economy?

You can read an economy around fuel usage, you can read an economy around power usage, you can read an economy around demand or purchasing power improvement, urikuzviona.

“Saka imimi manje the trouble is tirikuona the signs and symptoms of a recovering economy, except we cant interpret those findings, except in the negative.

“So even if the prices dze fuel have to come down, I can assure you the RBZ would still need to double its allocation to fuel,” he said.

When the Daily News put it to him that this sounded like “smart spin”, Charamba characteristically laughed uproariously before retorting:

“It’s not even spin, its a fact. Talk to vana (Confederation of Zimbabwe president Sifelani) Jabangwe, they will tell you this.

“It’s critical for you guys to know kuti how do you read this economy.

Just take a sub sector ye agriculture. You celebrate the return of food security, do you know what that means in terms of fuel terms? You celebrate the escalation in the hectarage ye wheat, do you know what it means in terms of fuel, increased demand. Saka ndoma linkages amuri kutadza kuita establish,” he told the Daily News.

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