Fiscal reforms need support, time

IF we were to ask Zimbabweans to name just one thing they would want fixed first in the economy, they would without doubt tell you they need a stable currency to use for their day-to-day transactions.

Rightly so, given what is currently obtaining in the country in terms of prices, which for some basic products and services, have doubled. In some cases, prices have even gone up in US dollar terms, reflecting the pricing distortions that consumers have had to endure.

The availability of products has also become a challenge amid allegations and sometimes false ones for that matter that some market players are not playing fair and are manipulating the system at the expense of the consumer. The bottom line, however, which everybody is aware of is that we have an unstable and weakening currency.

While the authorities have maintained that the country will continue to use the multi-currency system anchored on the US dollar, and that the bond note is equal to the US dollar, some stakeholders in the market have not accepted this and we see it through everyday prices.

Official inflation figures have also captured the price increases, all on the back of currency distortions and instability.

The good thing is that the authorities, Finance and Economic Development Minister Professor Mthuli Ncube, is fully appreciative of the challenges currently bedevilling the economy. He is fully aware of the source of our challenges as well.

Unlike the generality of the public who believe, for example, that the bond notes are solely responsible for the currency challenges being experienced in the country, Minister Ncube is aware that there is more to the currency volatility and loss of value than the bond notes, an instrument that was actually created to solve our currency problems.

While the situation might not have been as bad as it is now, the country started experiencing cash shortages well before the idea to introduce bond notes was mooted. This is testimony that the currency challenges go beyond bond notes, and Minister Ncube is aware of that and has said the same in the Transitional Stabilisation Programme as well as the 2019 National Budget Statement.

Just yesterday, he reiterated the same point: “Balancing of the Budget, in combination with several other measures pronounced in the 2019 National Budget, were a first step in the process to carry out currency reforms in Zimbabwe.”

Some of the issues that are key to currency reforms include dealing with the Budget deficit, “a key driver of the value of a currency”. There also is the issue of money supply whose management is important for maintaining the value of a currency. Inflation also comes into play and if left unchecked can cause serious damage to any national currency.

All these, Minister Ncube is aware of, but unfortunately as many of us would want, there is no magic wand that can produce sweeping solutions overnight. It has to be a process, a painful one for that matter to some people who did not cause the problem. Spending time bickering about how and which method to use will just delay the process and inflict more pain on us.

Yes, as Zimbabweans we have every right to question and seek explanation, but this should be done in a way that does not derail progress, criticising for the sake of criticising. Remember, some of the people and institutions that claim were not consulted are part of the problem.

What is important, which most of us should find comfort in, is whether we are moving in the right direction. The last two months with regards the trade deficit should be taken as a sign that in Minister Ncube we are in the right hands.

As we report elsewhere in this publication, Government achieved a Budget surplus of $29 million in the month of October, the first time in many years.

This positive showing follows another significant decline in the Budget deficit in the previous month of September when itwas approximately $19 million, down from $651 million in August and lower than the targeted $99,9 million.

This reflects a Government that is walking the talk. It shows a disciplined Government that is sincere in solving our challenges and deserves all the support we can give as a nation.

Source :

The Herald

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