‘Massive litigation against ED’s unpopular economic policies inevitable’
Former Finance Minister Tendai Biti said plans to take President Emmerson Mnangagwa to court over his recent policy that prohibits banks from lending were in place.
Mnangagwa on Saturday ordered banks to stop lending with immediate effect in a move he said was designed to stop speculation against the Zimbabwean dollar and was part of a raft of measures to arrest its rapid devaluation on the black market.
The regime has announced a potpourri of contradictory, self defeating , punitive and vindictive measures with the intended aim of stopping or reversing the dramatic and rambacious free fall of the Zimbabwean dollar and the consequential inflationary spike experienced in the last two weeks
The domestic currency, which is officially quoted at 165.94 against the U.S. dollar, has continued to slide on the black market, where it is trading between 330 and 400 to the greenback.
Mnangagwa said the new measures were meant to arrest the currency’s depreciation.
“Lending by banks to both the government and the private sector is hereby suspended with immediate effect, until further notice,” Mnangagwa said in a statement.
But Biti argues that the measures were illegal and vowed to drag the regime to court. He also proposed a raft of solutions to end the skyrocketing financial and economic crisis in Zimbabwe.
“Truth is the measures are ill-thought and reflective of a paranoid moribund incompetent regime that believes everything and everyone is an enemy and a saboteur.
“A regime that blames everyone except itself for the humongous mess it has plunged Zimbabwe into a regime that sees shadows everywhere,” the opposition Citizens Coalition for Change (CCC) interim vice president said.
“The dramatic fall of the exchange rate stems from the introduction of the Zim$ when the necessary preconditions were absent. It stems from a huge mismatch between supply and demand.
“It stems from the failure of the Dutch auction system. It stems from a huge budget deficit monetized through the printing of money.
“It stems from corruption and the billions of Zim$ being pummeled into the system from illegal deals Given this only full and unmitigated re-dollarization provides a short term solution.
“Anything else, including the regime’s new measures is an absolute joke and a sheer worst of time Policy making must never be allowed to be anecdotal or a product of beer hall diatribe. The new measures smack of that.
“Broad sweeping statements and conclusions are made without evidence data. Major decisions are made without analysing the legalities of the measures or their consequences on the macro or micro level.
“We have always argued that this is the worst government in the history of governments and the latest measures prove that.”
Biti further argued: “The key points of the new measures are as follows a)continuation of the Dutch auction system. b)Suspension of all lending by Banks. c) Suspension of major services by stock brokers.
“d) Increase in Capital Gains to 40% from 20 % on shares sold in less than 270 days e)2 % levy on US$ cash withdrawals above a $1000. f) Increase in IMMT tax on US$ transactions to 4 % & 2% on Zim $
“g) Retailers and businesses allowed to charge in US$ on a willing buyer willing seller exchange rate regime. h) US$ taxes to the government now to be paid on the willing buyer willing seller exchange rate regime.
“We now await the legal instruments necessary to effect the above measures. Save to say that massive litigation is inevitable. For instance it is blatantly unlawful to ban banks from lending when it is their core business The new taxes and proposed civil penalties are unlawful.
“The truth of the matter is that Zimbabwe deserves better. It deserves new leadership,” Biti said. Nehanda Radio