ED must fix liquidity crisis

HARARE - While we condemn in the strongest sense the bombing — it is totally unacceptable and regrettable — at a Zanu PF rally at White City Stadium in Bulawayo last Saturday, President Emmerson Mnangagwa’s administration and the nation at large need not lose sight and focus on the myriad problems bedevilling Zimbabwe.

Of note is the intensifying liquidity crisis.

The deepening crisis, which started way back during deposed president Robert Mugabe’s time, needs urgent attention.

So bad has the situation become that the parallel market is now charging shocking rates as high as US$1/$1,70 bond notes for transfers, as desperate companies and individuals flock to the illegal traders to access the highly sought-after foreign currency and cash.

The rates are totally incredible and scary.

They point to a repeat of the 2006-8 crisis when the local currency — bearer cheques, which had been introduced by the Reserve Bank of Zimbabwe (RBZ) to curb a crippling liquidity crisis — back then traded at record rates way above US$1/$1 000. 

But the biggest blow from today’s liquidity crisis has been the steep rise in the prices of basic commodities.

As the parallel market foreign currency rates rise by the day, driven by the increasing demand of the hard currency, prices of basic commodities have gone up.

While the central bank — which has promised that the just-ended 2018 tobacco selling season would ease the cash crisis, but is yet to be seen — is struggling to allocate enough foreign currency, desperate companies have turned to the parallel market where they are charged punitively steep rates.

This has grossly increased their production costs, a burden being pushed on to the hapless ordinary Zimbabweans, who are now increasingly failing to afford basics such as bread and soap, and even a single decent meal a day. It is causing untold suffering. The prices of basics are rising to levels beyond the reach of many.

While the adamant authorities may insist the bond notes — a unique currency introduced to curb the liquidity crisis, just like the bearer cheques — have been a success, all the happenings on the ground prove a monumental failure.

The bond notes have significantly lost value against the United States dollar. And at this rate, it will crash and get messier.

Rather than hap on and on that Zimbabwe is open for business, Mnangagwa ought to fix this crisis.

To many, Zimbabwe is not yet open for business — nothing has changed since Mugabe’s departure.

The going has got even tougher, some may say.

Comments (1)

ED is a product of the same corrupt, economically illiterate and arrogant Zanu PF, which created the problems the country is now facing. He has neither the ability no the will to fight the very same corruption he created.

Ken Sharpe - 3 July 2018

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