By Jacob Mafume
The ZANUPF government‘s intention to extent what they call the a bond facility is not only worrying but a sign of failure to deal with the cash crisis.
We stated before that the bond note was not only illegal but a misplaced measure which would not solve the liquidity crisis. Those who doubted our analysis can now safely accept that our prediction was apt.
We mentioned that the cash crisis was not a result of what ZANUPF claims, the folktale myth which Chinamasa has been spreading that externals were coming and leaving with baskets of United States Dollars.
We argued then as we do now that the current crisis was a result of fiscal indiscipline which has seen the government reaching a deficit of more than 43%, official figures confirmed by Chinamasa.
Fiscal mismanagement has also seen domestic debt ballooning to 60 percent of GDP indexed in United States Dollars the stock of sovereign debt increases to US$16 Billion disproportionate to an economy with a GDP of about US$10 billion.
To monetise this deficit the government invaded the central bank using funds kept in RTGS balances and NOSTRO accounts. The government also issues toxic treasury bills worth billions of dollars which has resulted in the crowding of the financial leg room at the expense of private sector activity.
The point we make is that as long as there is fiscal indiscipline the problem will not only remain but will exacerbate, digging the economy into a bottom less abyss.
The situation at banks has not improved; people continue to sleep on queues while accessing funds through withdrawals has since been turned into a lottery.
Bond notes have served to create serious distortions in the economy, some shops display different prices for the United Stated Dollar and for the bond note. This was predictable, we said it in advance that an abused citizen rejects the authority of the state and a currency becomes an immediate casualty.
Introduction of the bond note has since resulted in the spikes of prices including basic commodities. ZANUPF now creates another conspiracy; they now argue that bond notes have not brought results because they are also finding their way through the borders to neighbouring countries.
The question would be why are Pulas or Kwachas not finding their way into our country considering that Zimbabwe already adopted a multi-currency regime.
The government needs to stop this story telling madness but accept the truth that the several trips that the executive is taking, ghost workers and allowances for the elites are taking a toll on the fiscus.
The government must therefore focus on supply side solutions, expenditures retrenchment with a target of maintaining a primary balance. Instead of extending the bond note facility the state must scrap it, to avoid further confusion.
Jacob Mafume is the Spokesperson of the People’s Democratic Party (PDP)