Hands off the market, Govt told

HARARE - As Zimbabwe continues to face a deteriorating economic situation created by recent monetary policies pronounced by government, the Daily News on Sunday spoke with various Zimbabwean economists to seek their views on what government should do to save the country’s economy.

Kipson Gundani 

Government should take its hands off the market and allow the economy to re-correct. 

The immediate actions include liberalising the exchange rate. 

The main thing lacking in Zimbabwe is confidence. That’s the missing link. 

We have sufficient exports to sustain a reasonably steady local currency but we are simply not willing or able to put together an institutional framework that achieves that stability. 

Secondly, we need to deal with the production side.  

We are a highly consumptive country. It’s sad that we are a country that can’t even feed itself. Having said everything, we have a consensus issue to deal with. We are a divided nation.  Someone has to unite us by doing the right things.

Dollarisation is another dead end mistake.  Declare RTGS a currency and float the rate.  Ensure minimal Reserve Bank of Zimbabwe (RBZ) overdraft to government and manage MS. The market will find a new equilibrium. 

There will be no hyperinflation and the exchange rate goes nowhere as long as money supply is well managed. While it is commendable that wisdom has eventually prevailed on policy makers in dealing with the fuel challenges, the major challenge that continues to disrupt the economy is the absence progressive currency reforms.

It is imperative for the government to deflate and resize the huge $10 billion RTGs balloon in the economy, and the only way to do so while also preserving some residual value would be through a market exchange rate. Granted, there would be some social anxieties, but it is high time government takes bold decisions to implement painful reforms to correct the serious monetary imbalances in the economy in order to save jobs, incomes and corporate balance sheets.

Simbarashe Gwenzi

The way forward is for the government to stop allocation of forex to the free-market forces. 

The idea of an allocation committee won’t achieve efficient and timely allocation of forex to the areas of need. 

The fuel dealers ought to sell fuel in hard currency, it will deal with the excessive demand and leakage of fuel across borders. 

After these measures in the short-term there should be a correction of the market to a fair pricing of our goods and services. Consumers ought to adjust their consumption in the short-term as exerting ourselves in a crisis tends to worsen the situation and may lead to rash and damaging decisions. The Government ought to begin and conclude political dialogue and find consensus with the leading opposition party to improve our political risk.

Companies are closing down on the back of rising operating costs. Therefore, I would recommend that they reduce operating capacity as a total shutdown. 

Economies the world over go through booms and slumps. These are cyclical and entrepreneurs and managers ought to share ideas on how to go through economic shocks. 
Leaner operating models are the order of the day. Keep a core or skeletal staff. Dollarisation is not the way to go. We don’t have control of money supply and therefore it weakens our monetary policy. We need a local currency to support local trade.

Brian Muchemwa

While it is commendable that wisdom has eventually prevailed on policy makers in dealing with the fuel challenges, the major challenge that continues to disrupt the economy is the absence of progressive currency reforms. 

It is imperative for the government to deflate and resize the huge $10 billion RTGS balloon in the economy, and the only way to do so while also preserving some residual value would be through a market exchange rate. Granted, there would be some social anxieties, but it is high time government takes bold decisions to implement painful reforms to correct the serious monetary imbalances in the economy in order to save jobs, incomes and corporate balance sheets.

Christopher Mugaga

We are at cross roads where we can choose either to salvage the situation or to salvage ourselves, but at the moment years of economic stagnation have creeped in. 

You don’t need short term measures like what government has been implementing because these are not short term problems. 

Honest engagement is required to revive this economy and the president should be more decided than ever before because the feeling is he needs to look at his team because I’m sure he has a big number of team players working against him.

I have every reason to believe there is need for him to put his people in order. 

He needs to draw a line between his government and that of Robert Mugabe because at the moment he seems to be working with the some people who were pushing for his ouster in Zanu PF. 

He can’t reverse the fuel price increase; the decision was not bad because the unrealistic prices were thwarting this economy badly. However, he needs to make known the whole structure of the fuel supply chain to Zimbabweans, to remove monopoly, oligopoly and duopoly. The fuel industry structure should be made public and if it means new players should enter into the industry so be it. RBZ Governor Mangudya should publicise the disbursement of the fuel allocations. 

Now talking about introducing our own currency, I don’t know what they are smoking. 

We never had a chance to choose our own currency and the market has been making the decision. Mthuli Ncube should never bring to the table a flight plan of one year like he saying we need one year to introduce our own currency, when there are no traffic controllers.

His flight plan is already distorted and that is dangerous by creating a crisis of expectation. It is not the duty of the government to detect to the market. The US dollar came because of the market and by the end of the year the market will determine what currency is conducive. 

This country is moving in a new round of dollarization so we should let it.



 

Comments (2)

Thank you Economists for explaining things to us, especially the fuel pricing. Many people joined the stay away without this knowledge. Continue pushing for the right decisions to be made. Tanzwa neSosho media.

Sama - 22 January 2019

Title should have read, economists support fuel price hike... Media should also play role in educating public especially in our situation.

Mu - 22 January 2019

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