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Editorial Comment: Govt has to act on currency crisis

The mounting pressure by civil servants to be paid in United States dollars is the clearest indication yet that the government’s approach to the currency crisis afflicting Zimbabwe is not working.

Editorial Comment

A month after the Reserve Bank of Zimbabwe (RBZ) ordered banks to separate foreign currency-dominated accounts from those based on real time gross settlement (RTGS) balances, ordinary people have endured astronomical price increases and severe shortages of basic commodities.

The move by the RBZ triggered panic as people who were mindful of the currency problems of 2009, where they lost their lifetime savings due to hyperinflation and the demise of the Zimbabwe dollar, rushed to convert RTGS balances or cash in bond notes to foreign currency.

This pushed exchange rates on the parallel market to astronomical levels and the economy is yet to recover from that madness.

A number of pharmacies and health providers started turning away people on medical aid and demanding payments in foreign currency.

Poor people are struggling to get access to life-saving drugs or buy basic commodities because they have no foreign currency.

The government continues to insist that the value of bond notes is at par with the US dollar and is blind to the struggles that ordinary people are enduring on a daily basis.

Teachers and nurses have now officially communicated their demands to be paid in foreign currency because their RTGS salaries can no longer sustain them in an economy that has essentially dollarised.

Hundreds of teachers belonging to the Progressive Teachers’ Union of Zimbabwe on Friday took to the streets of Harare to press their demands and accused the government of not handling the crisis with the urgency it deserves.

The demands by the teachers are justified and they probably represent a popular sentiment in the wider civil service.

However, pronouncements by both Finance minister Mthuli Ncube and RBZ governor John Mangudya at the just-ended pre-budget seminar for legislators held in Bulawayo did not indicate that the government had a handle on the situation.

Mangudya in particular went out of his way to defend the failed bond notes.

In an interview published elsewhere in this edition, the governor said he believes that the surrogate currency had helped boost exports, but ordinary people and business have sent a clear signal that they don’t believe in the bond notes.

Ncube will present the 2019 national budget on November 22 and expectations are high that he will introduce currency reforms, but the gravity of the currency crisis demands that he acts now.

Finding a solution to the crisis will start with an admission that the experiment with the surrogate currency failed.

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