Zimbabwe’s new finance minister said he would accelerate plans to pay arrears to the World Bank and the African Development Bank. Picture: Reuters/Philimon Bulawayo
HARARE – Newly appointed Minister of Finance and Economic Development, Mthuli Ncube is reported to have been told that his proposed currency reforms will not be possible in the near future. Ncube had said that he was looking at shelving the bond notes possibly before the end of the year.
However, The Zimbabwe Independent reports, that Ncube was advised that this would not be possible as there is currently no alternative. Sources who spoke to The Zimbabwe Independent said, Ncube held meetings to engage with stakeholders.
He was not only told of the economic problems the country, companies and individuals were facing but that his currency proposals were dead in the water, at least for now. He was also told that government is in a deep fiscal crisis and how it was surviving through printing or creating money through quasi-currency instruments, running huge and certainly illegal borrowings with the central bank, and widening budget deficits to fund its runaway expenditures.
In short, the government is living beyond its means and has created a huge financial mess which will not be easy to clean up.
On the options advanced by Ncube, full dollarisation is a long short because for that to happen we need sufficient forex and liquidity in the economy; so where will the money come from? Joining the Multilateral Monetary Area will be impossible because Zimbabwe does not meet the convergence criteria, which include the fact that a member must have their own currency. There are also many other benchmarks.