You can always trust the Zimbabwean commentariat to be quick with reactions and commentary after every major event.
The monetary policy statement, released on Wednesday afternoon by RBZ governor John Mangudya, came after weeks of speculation and rumour. When it did come, it confirmed a few things that we already suspected; the RBZ is finally ditching the 1:1 parity and partially floating the RTGS and bond notes.
But it also brought with it a new round of speculation; what will happen, and what does it all mean?
Here, we check out some of the initial reaction from commentators to RBZ’s move. Typically, they are as sharply divided as they are on any debate.
Robertson: The ‘D’ word missing, but convergence possible
While Mangudya refused to use the “D” word, economist John Robertson says this was effectively a devaluation.
“He didn’t mention it by name, but they have devalued it. We should now see a convergence of a stable rate going forward. Buyers and sellers will now need to meet and agree on a rate,” Robertson said.
Mandimika: One step towards Zimdollar
The step is yet another step taken so far towards the full introduction of a new local currency, following the separation of foreign currency accounts from RTGS balances back in October.
“The move is largely constructive as the government now officially recognizes that US dollars and RTGS$ are not at parity,” says Neville Mandimika, analyst at Rand Merchant Bank. “The introduction of a Zim dollar will be just in name, but the RTGS$ is essentially the Zim dollar.”
Chakravarti: Mangudya was brave, but..
Economist Ashok Chakravarti, who for a long time has advocated for a managed auction as a way out of the forex crisis, calls it a “brave move” by the RBZ, but one that may need additional measures to soften the impact in the short term.
He says businesses that bought dollars on the black market were charging higher prices, fanning inflation, which reached 57% in January.
“This system will stop that completely because you will have a transparent interbank rate which will be used by the market and importers to price their goods,” says Chakravarti.
Kambasha: Over to you, Prof Ncube
This, really, is making official what the market was already experiencing, according to leading fund manager Tino Kambasha.
“Our daily lives had already adjusted to 1:4 for us ordinary Zimbabweans so RBZ announcing it is just them agreeing with what we were already living (exactly like what happened in 2009 with Dollarization when we had dollarized about a year before the official announcement),” he says.
It’s now up to Finance Minister Mthuli Ncube to hold the line on the fiscal side and resist the urge to spend too much. Says Kambasha: “As long as the Prof doesn’t heed to the pressures that be and keeps his foot on the brake pedal, we should feel some relief in the medium term but we shall suffer in the short term.”
Busisa Moyo: The ghost of FCAs past
One key worry for many is a requirement for exporters to use their forex within 30 days. Fears of the FCA raids of old still abound, says Busisa Moyo, CEO of United Refineries.
“This is a bad move; there should be no limit. This erodes confidence and brings fears of liquidation of forex belonging to private sector. We should encourage savings in dollars as well.”
Biti: The world’s worst government
Trust Tendai Biti, the former Finance Minister and current deputy chair of the MDC Alliance, to come out the gate spitting his customary fire and brimstone.
“It is a disaster to embark on currency reform in the absence of key fundamentals to back that currency. These include market confidence, reserves, a decent capital account and a stable macroeconomic environment. This is elementary,” he tweeted.
He is in no doubt that the economy, with these measures, is headed down the tubes.
He then went full Prophet Amos in his forecast: “Regrettably the economy now enters another period of self-induced shocks that will see salaries and values being devalued, hyperinflation, shortages and queues. What a dog’s breakfast.”
Biti then capped it all off in vintage fashion: “With great respect to Venezuela, ours must surely be the worst government on the planet.”
Mashakada: A Zimdollar by another name
Tapiwa Mashakada, the MDC Alliance’s secretary for economics, said this was the return of a local currency, whatever terms Mangudya chose to use.
He said: “This is Zimdollar by any means. The local unit will be determined by the interbank market of forex and forex bureaus. These trading rates will be published daily in banking halls and the media. The economy has de-dollarised cleverly. USD are now foreign currency. My prediction has come true. Zimbabwe now has a sovereign currency called ‘RTGS dollars’ which is a euphemism for Zim dollars. It’s like saying you eat bacon but not pork. The domestic currency has bounced back without addressing the key fundamentals. Goodbye dollarization hello Zim dollar.”
After all the commentators have had their say, the most telling reaction will be on the streets, among the forex dealers and kombi drivers.
