Cash-crisis plan by month-end – FinMin

Finance and Economic Development Minister Mthuli Ncube

THE government will, at the end of September, announce measures to address the ongoing currency crisis, when the central bank makes its monetary policy statement, newly appointed Finance Minister Mthuli Ncube said on Monday.

Dollarised Zimbabwe has grappled with a shortage of bank notes, blamed on its huge trade deficit, excessive government spending and low confidence in the banking system, since the first quarter of 2016.

Speaking after being sworn into office at State House, Ncube, who has called for the scrapping of the unpopular bond note parallel currency, said government was exploring various measures to resolve the currency crisis.

“We are looking at several options. Those are being analysed with urgency and then we will come up with a plan,” Ncube told reporters.

“You will hear, at the end of the month, from the governor’s monetary policy statement some of the measures that are beginning to be implemented because, ultimately, we want the Zimbabwe currency back, but there are certain steps that need to be put in place before that.”

‘Bond notes must go’

Before his appointment, Ncube had called for the abandonment of bond notes, which were introduced in November 2016 as government desperately bid to ease the shortage of dollar bills. The notes have failed to ease the shortages, only succeeding in creating another platform for arbitrage.

Ncube has also proposed setting up a Monetary Policy Committee as well as a Macroeconomics Co-ordination Committee to build consensus across government and other sectors.

He also wants to set up a Zimbabwe International Economic Advisory Council (Zieac), under the Ministry of Finance and working with Foreign Affairs. This council, which will have up to 15 members, would lead Zimbabwe’s re-engagement with foreign investors and international funders.

On the council would be senior economists with global clout and top business leaders. The members would be drawn from Europe, US, Asia, Africa and Zimbabwe.

“The cash crisis issues are also a symptom of the general poor macroeconomic picture, on the fiscal front, on the monetary front, in terms of external confidence as well,” Ncube said on Monday.

“All that is causing or impacting the cash crisis issue, so one has to look at the holistic picture in order to deal with it, but clearly there will be steps on monetary policy that I’m going to take.”

Privileged to serve

Asked if he has the freedom to implement his reforms, Ncube gave an emphatic “I do.”

Analysts have said Ncube’s chances of success rest on the level of support he gets from President Emmerson Mnangagwa.

Turning to the civil service, which takes up as much as 70% of government revenue and upwards of 90% of its total expenditure, Ncube was dovish on reforms.

“I always say that it’s easy for ministers of finance to target the civil service and workers or whatever but also there’s just simply the issue of service delivery which is that for those who are in government now, are they delivering the service for which they are employed to deliver.

So, dealing with service delivery is also key to dealing with the cost of the civil service in the first place,” the former African Development Bank chief economist said.

“So, certainly, that’s something that I will sit down, reflect on, consult, it’s very important. And this is very important, that I must consult with the president on everything, It’s his vision. I feel privileged to have been appointed.”