Home / Politics / Letter to President Mugabe – – . . . On National Budget Framework, State guarantees and bond coins

Letter to President Mugabe – – . . . On National Budget Framework, State guarantees and bond coins

I refer to Zanu-PF’s 2014 National Congress resolutions which are now in the public domain under the Congress theme: Accelerated Implementation of Zim Asset, and recent, pertinent socio-economic developments in the country.

I hereunder submit recommendations in the national interest; going forward.

The 2015 National Budget

The Government’s outstanding payment obligations to farmers for grain deliveries to the Grain Marketing Board (GMB) now stand at US$52, 4 million. I recommend that – with immediate effect – the concerned farmers should be paid their dues partly by way of agricultural inputs i.e. seed, fertilisers and chemicals, which can be distributed through GMB’s countrywide depot network.

The rains are upon us and are looking good, if not excessive.

Input suppliers are well-stocked and run the risk of not being able to dispose of these stocks before this agricultural season ends.

We are already in the middle of the 2014/15 agricultural season.

Full cash settlement to farmers and paying input suppliers thereafter can be achieved progressively in this first half of 2015, as funds flow from the AMA Bill already floated or from the Fiscus, as and when funds become available.

The GMB has the requisite SAP computer software, which can competently and efficiently take care of related accounting matters with minimal further staff training.

The 2015 National Budget has already been debated and passed by both Parliament and Senate.

It has also received Presidential Assent.

What is clear, though, is that our Budget framework needs serious restructuring and rationalisation. It is now archaic and outdated.

Going forward, Zimbabwe needs a simple, straightforward, less complex and easy-to-understand Budget framework in which, for instance, mega projects do not fall under an obscure and hidden other book, category or section, inappropriately called “Vote of Credit”, which is very confusing and unclear to the ordinary stakeholder.

The Infrastructure Development Bank of Zimbabwe (IDBZ), Agriculture Bank of Zimbabwe (AgriBank) and the Industrial Development Corporation (IDC) should without delay now draft viable project proposals for their entities for possible funding by our all-weather friends, the Chinese, as per their request during President Mugabe’s State visit to China in August 2014.

Alternatively, these proposals can be put forward directly for possible financing by China’s new Asian Infrastructure Investment Bank.

This bank is fast replacing the Bretton Woods Institutions (IMF and the World Bank) as lender of last resort in the global economy.

And their loans do not come with the notorious and onerous strings and conditional ties now associated with the bloated, outdated and change-averse Bretton Woods Institutions.

This new bank has already assisted Russia and Argentina with US$24 billion and US$2, 3 billion, respectively, for currency swaps, and a US$4 billion loan to Venezuela.

The assistance to Russia and Venezuela was partly to offset the effects of United States sanctions against these two countries.

We should not lose sight of the fact that our Chinese friends have deep pockets, with an estimated US$4 trillion in foreign currency reserves.

They have the requisite financial capacity and muscle, which we can tap into provided we make the right and appropriate moves timeously.

Their assistance normally comes also relatively cost-effectively.

The debasing and recompilation of our Gross Domestic Product figures should now start in earnest as our GDP is miscalculated, and, therefore, misleading and grossly understated, in my view.

This should preferably be completed by the time of the next mid-term Fiscal Policy review.

Amnesty for remitting foreign currency balances offshore or regularising of the same, which was extended by the Reserve Bank of Zimbabwe and expired on December 31, 2014, should be further extended to June 30, 2015.

This will give the concerned individuals and entities further leeway.

Its success or otherwise should be highlighted in the mid-term Monetary Policy Statement coming after June 30.

Civil Service rationalisation should be linked to 2015 collective bargaining.

Its preparation and consideration should, therefore, commence immediately.

The review of and alignment of all relevant pieces of legislation to the new Constitution, among other objectives, should be done concurrently with the very necessary and fundamental amendments to this very Constitution itself, as fully justified by the more than 250 amendments previously proposed by the Zanu-PF Politburo.

These proposals were then not catered for and other serious flaws in this Constitution have since been noticed.

This should be possible as Zanu-PF enjoys the requisite two-thirds majority in both Houses.

We should now target this to be over and done with by June 30, 2015 at the very latest.

Operationalising the Sovereign Wealth Fund should be done forthwith now that the legal framework is in place.

International legal suits such as the one against a South Africa-headquartered conglomerate for the wanton looting and export of our diamond resources from the Marange diamond fields, among other deserving suits, should be instituted forthwith and, in any event, also not later than June 30, 2015.

Also warranting priority is international legal action for crimes against humanity committed by the Ian Smith regime during the Second Chimurenga.

There is evidence of the use of banned substances, chemicals and weapons of mass destruction at the time.

Finally, the demonetisation of the Zimbabwe Dollar should be accelerated by the use of Bond coins now in circulation.

Corruption

The restructuring and rationalisation of some of Zanu-PF’s administrative organs such as the Politburo already undertaken, should now be buttressed by the necessary by- elections for Members of Parliament in the concerned constituencies. Also by-elections in constituencies likely to fall vacant following the split in opposition ranks are necessary, urgent and imperative.

Elections for new councillors for disbanded or to be dissolved urban councils – crucially Harare and Bulawayo – following the dismal failure by same in service provision, are also necessary if Zim Asset is to be successfully accelerated in 2015 and years to follow.

All elections stated above can run concurrently in the first quarter of 2015 to save time and economise national resources.

Once these elections are conducted (but even before or concurrently), the cleansing process can be extended to technocrats in central and local government authorities as well as other public entity structures now that some instituted audits have been finalised.

Corruption and other malpractices should also be dealt with decisively in these bodies, the private sector and non governmental organisations.

Zim Asset can never be successfully accelerated without dealing decisively with the scourge of corruption.

State Guarantees

The Zimbabwe Asset Management Company (Zamco) should only purchase the capital portion of secured non-performing loans from banks and other financial institutions.

Banks and these financial institutions should write off the interest portion against provisions they have already made or should make, in their financial statements and books.

This serves to eliminate adverse effects on their profitability levels.

The concept of Government guarantee accepted and taken on board on the US$100 million loan for small scale miners by a Chinese financial institution is most wise and prudent, and should, therefore, be extended to encompass all small and medium enterprises and agriculture.

This is completely in sync with what I have long advocated: State guarantees on 99-year land leases, special land permits or non-performing loans purchased by Zamco from banks and other financial institutions.

This will help accelerate Zim Asset in a very big way as desired and resolved at the 6th Zanu-PF National Congress.

Bond Coins

Some of the fears, apprehensions and concerns being expressed over special Bond coins with equivalent values to US cents are unwarranted and/or unjustified and are generally derived from ignorance and/or inherent confusion about issues involved or at play.

Take, for instance, the concern by some importers that these coins cannot be used outside the country. This argument ignores the fact that the coins can easily be converted at banks or other financial institutions for US dollar notes.

Such concerns may, thus, be coming from individuals and/or entities without bank accounts who have been or continue to operate outside the formal banking system.

They, therefore, have only themselves to blame for their supposed predicament, which is uncalled for and is avoidable.

Remember, it has always been estimated that about US$7 billion (in cash) is circulating outside the formal banking system at any given time.

The chickens may now be coming home to roost. Going forward, we should not import Rand coins anymore.

We already have more than enough of them.

In any case, they also suffer from the problem of exchange rate asymmetry, which gets worse with Rand/US$ cross rate fluctuations, which are very prevalent, particularly at the moment.

Do not also forget that we had to export a large consignment of these Rand coins because of this reason and the confusion that this always causes to our transacting public and institutions.

We should also now use these special Bond coins to first and foremost demonetise the Zimbabwe Dollar as already envisaged and planned.

In addition, we should settle the nation’s domestic debt in its various forms and facets.

This will have an immediate and positive effect on aggregate demand on the economy, which is currently at its lowest ebb.

We should also introduce the Zimbabwe Dollar coins without further ado or delay, as these are already in RBZ vaults, lying idle and possibly gathering dust and rust.

We should look at particularly the Z$1 coin and the 50 cent coin for starters to deal with change and pricing matters instead of going back to rudimentary tokens, sweets, ballpoint pens and credit notes for the former purpose. These coins will be fixed at and have equivalent values of 10 United States cents and 5 US cents, respectively, under the multi-currency regime for now and the foreseeable future.

For those with genuine “fear”, reservations and apprehensions at the very mention of the word “Zimbabwe Dollar”, please give them the assurance that – in the interim – these Z$ coins only will be secured against our gold reserves.

Remind them also that in 2015, we are targeting and likely to produce 20 tonnes of refined gold at Fidelity Printers and Refiners, having achieved about 12 tonnes at this source of the precious metal in 2014, and applying to be readmitted to the London Bullion Exchange after surpassing the London Bullion benchmark of 10 tonnes production.

For their (the concerned and fearing souls) peace of mind, give them the further assurance that the Zimbabwe Dollar notes will only return at some future date yet to be determined, but also even then, only secured against the nation’s gold reserves and reserves of our other precious minerals such as diamonds and platinum.

That should, indeed, put their minds at rest and allay their fears and doubts, failure of which I do not know how they can ever be assisted from the obvious financial trauma that they have gone through, which experience is unlikely to recur in future or anytime soon, in my view.

◆ Edmore A M Ndudzo is a former member of the boards of Zimre Holdings and Zimre Property and Investment Company. He writes in his personal capacity as a Zimbabwean citizen.

Check Also

Zimbabwe: ZCTU Calls for National Lockdown Amid Job Cut Fears

Zimbabwe Congress of Trade Unions (ZCTU) has appealed to the government to activate a national …