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Blessings Chidakwa
Zimpapers Elections Desk
RELENTLESS attacks on the country’s currency and economy have come to nought as prices in Zimbabwe dollar terms continue to tumble while the local unit firms against the US dollar with President Mnangagwa saying Zimbabwe could soon drop the use of multiple currencies.
Ahead of this year’s harmonised elections slated for August 23, the ideologically bankrupt opposition parties in their various forms had tried to use the exchange rate volatility and price hikes as a rallying point to discredit the ruling Zanu PF party and Government.
As the economic stabilisation measures continue to hold, on Tuesday, the market continued to push down the rate of the local currency against the US dollar to $4 771. Yesterday, the Zimdollar again firmed to $4 537 against the US dollar on the Reserve Bank of Zimbabwe Wholesale foreign currency auction.
Since June 27, the local currency has gained 31 percent against the US dollar.
Coupled with the improvement of the conditions of service for Government workers who were this week smiling all the way to the bank, surely there is no other destination Zimbabwe is heading to than an upper middle income economy by 2030.
At the rate that the country is going, the upper middle income status will be achieved way before 2030.
Unlike in the past when some rogue elements would manipulate the exchange rate with prices skyrocketing each time civil servants got a pay rise, Government has now nipped that in the bud.
Over the past few weeks, prices of basic commodities in most retail outlets have dropped by as much as 5 percent and seem to be continuing on that trajectory in response to the firming of the Zimbabwe dollar.
In an interview published in the latest edition of the Brick by Brick magazine, President Mnangagwa said the RBZ auction floor system could soon be abandoned, as it would have served its purpose.
“As we go forward, we should reach a stage where we may not need it because it’s not necessary. It has been put there to deal with a particular challenge and I think that challenge is going away. We may reach a stage very soon where we may not need it.”
President Mnangagwa also spoke about the attack on the Zimbabwe dollar.
“In 2009, I think, sanctions had succeeded to destroy our Zimbabwean currency. When you wanted bread, you had to carry $2 billion. That was not feasible.
“That is when we abandoned our currency and allowed the multiple currency system to apply — the US dollar, the Pound, the Euro, the Rand and so on. That stabilised our situation, but there is no country that can develop without its own currency,” he said.
President Mnangagwa said his administration will consider doing away with the multi-currency system, in favour of exclusive use of the local currency. “We have reached a stage where we must have our currency, but the currency is under serious attack. However, we will never abandon it. What we might do is to legislate against foreign currency to make sure we use our own currency.”
The President said despite being under attack countless times, the local currency is there to stay. “Whether there are elections or no elections, they always attack our currency because they want to remain dominant in our system. That is what we want to avoid.”
In an interview, Zanu PF National Spokesperson Ambassador Christopher Mutsvangwa said the stabilisation of the economy was a result of President Mnangagwa’s masterstroke policies and interventions.
“The increasingly obtaining price stability is a boon to the people of Zimbabwe. President Mnangagwa is fighting and winning the currency war, the last major and decisive battle stands in Zimbabwe’s titanic struggle of total decolonisation and full independence.
“The pegging of the Zimdollar to the gold standard is a master stroke. After all, gold is the currency of ages for the past 5 000 years of human civilisation while the much-touted US dollar is a mere 300 years old,” he said.
An analyst Dr Hamadziripi Dube said the economic war being won by the Second Republic was even getting recognition from the globe.
“Zanu PF has made urban and rural people gain more confidence in the party and its policies as the World Bank and IMF commended the progress in its economic development policies,” he said.
According to last week’s survey conducted by the Consumer Protection Commission (CPC), a 10kg bag of maize roller meal, which retailed for around $56 772 in June, now costs $39 239.
A 1kg packet of sugar, which was selling for $15 200 during the same period, now costs $10 680. The survey also shows that the price of a 2-litre bottle of cooking oil now costs between $17 000 and $22 000 depending on the brand, down from $28 600 last month.
In addition, a 1kg packet of salt, which was going for $7 499, is now pegged at $5 499, while a bar of laundry soap, which was pegged at $11 499, now costs $8 060. The price of a kg of commercial beef has dropped to $27 405 from $37 924. As of this week, most prices have further nosedived.
This follows the introduction of Government measures to stabilise the exchange rate, while promoting demand and wider use of the domestic currency, as well as encouraging foreign currency deposits in the banking sector.The measures have paid off with stability of the exchange rate in turn anchoring price stability and driving demand for local currency in domestic transactions, which economic agents had been avoiding due to its volatility.
Other measures introduced included increasing the foreign currency retention threshold on domestic foreign currency sales to 100 percent, transferring of all external loan obligations to Treasury, and allowing duty-free importation of basic goods.
Treasury also took charge of collecting foreign currency surrendered by exporters, with the proceeds used to service RBZ external loan obligations.
This resulted in the Finance Ministry creating space in the National Budget to cater for the transparent settlement of the 25 percent foreign currency surrender from all exporters and 15 percent for tobacco and cotton farmers.
Previously, the function was the sole responsibility of the central bank, an arrangement many economic observers felt created a gap for money supply growth.
Online Reporter