‘RBZ causing financial crisis by printing money to support govt programmes’
President Emmerson Mnangagwa has been accused of wrongly blaming the business sector for the spiralling inflation coupled by the financial crisis while exonerating the Reserve Bank of Zimbabwe (RBZ) which has reportedly been on a spree of unwisely printing money to support government programmes.
This comes at a time when prices of basic commodities are rising simultaneously while causing panic attacks among the general public.
Despite government orders to lift all restrictions on importation of basic commodities such as flour, cooking oil, mealie-meal and other goods, prices have continued to soar with a crate of eggs now selling at more than US$11 from US$4,50.
In his weekly column, Mnangagwa on Sunday blamed unscrupulous retail players in the country for applying unrealistic exchange rate levels in the pricing of basic goods in local currency.
He accused the business community of abusing the benevolence of the government to go against internationally set standards of making it mandatory for businesses to remit their foreign currency earnings to the Central Bank.
“Let me remind our business of a few facts, some echoed in all jurisdictions globally. At law and by worldwide practice, all foreign currency earnings should be surrendered to the government, through the Central Bank, as obtained worldwide,” he wrote.
“Worldwide, businesses access foreign currency for their needs from the central bank, through cumbersome processes and on the basis of market conditions. Here we have waived that position at law and in general practice worldwide, hoping to prop up our business sector and for ease of doing business. This act of magnanimity now looks underserved,” said Mnangagwa.
Observers, however, have dismissed Mnangagwa’s position saying that it was the Treasury’s alleged printing of money that had worsened the financial problems in the country.
Tinashe Murapata, a well established Harare economist accused the central bank of printing a lot of money to cover government businesses.
He started by asking: “Is it a coincidence that government is on the offensive blaming business for the economic collapse, lying about fiscal discipline and never in any of their diatribes speaking about RBZ printing to support government programs?”
“Later in the week I will break the astounding numbers further.
“But, the official numbers, using their own favourite Reserve Money- what the RBZ prints, increased by almost 100% between January of 2023 and February 2023 from ZWL 123 billion to ZWL 205 billion.
“That’s just in one month. Explaining why the rate went haywire in February.
“It means in February reserve money was up almost 1000% year on year. That’s ten times in one year.
“Now we can understand why in their narratives they blame everyone except the root cause.”
Murapata added: “This level of printing is unprecedented and reveals deep seated problems in government. Remember, February printing was not yet election printing. Election printing only started in May.
“It’s worth remembering that government banned the issuance of Inflation numbers in February in preference for blended inflation. Clearly the treasury knew what they had done but instead of explaining the extraordinary printing to the market they decided to ban inflation publication.”
Commentator Pride Mkono also accused the RBZ of printing money to pay contractors who end up manipulating rate on the street
“RBZ is printing money to pay contractors who in turn buy hard currency on the street which pushes the exchange rate and hence prices. Most of the shops benchmark prices on the parallel market rate which is increasing every week.
“This is a sign that government has failed to stabilize the currency and just like in 2008, we are heading for another crushing of the Zim dollar,” he said.
Last week, Steve Hanke, a Professor of Applied Economics at The Johns Hopkins University in Baltimore rated Zimbabwe as the most miserable country in the world.
The Southern African country is facing an acute economic crisis coupled with the highest inflation in the world recorded by Hanke as 666%.
He accused the ruling Zanu-PF party led by Mnangagwa of operating “a political mafia than a political party” leading Zimbabwe to be the “most miserable country in the world”.
“Zimbabwe takes this year’s prize as the most miserable country in the world. Since the reign of Robert Mugabe, which began in 1980, and then his successor, Emmerson Mnangagwa, the political party Zanu-PF has had an iron grip on Zimbabwean politics.
“Indeed, Zanu-PF operates more like a political mafia than a political party. Its policies have resulted in massive misery,” Hanke said.
“For example, Zimbabwe has suffered endemic inflation since the Mugabe era, including two episodes of hyperinflation, in which the inflation rate (a component of the HAMI), exceeded 50 percent per month for 30 or more days.
“Last year didn’t deliver much better, with annual inflation at 243.8 percent, and lending rates following suit at 131.8 percent,” Hanke added.