Mthuli Ncube ‘illegal’ measures reflect fall-out between Ministry and RBZ

Measures instituted by Finance Minister Mthuli Ncube to save the Zimbabwean dollar from free fall have been described as “illegal” and a reflection of a fall-out between the Ministry and the Reserve Bank of Zimbabwe (RBZ).

Zimbabwe is in a dire economic situation coupled by a financial crisis and skyrocketing inflation. The local dollar is falling rapidly against the US dollar trading at more than US$1: ZWL3500 on the black market.

Due to inflation, prices of goods are rising in both ZWL and USD. Both public and private workers are rejecting salaries in the local currency.

In a bid to address the situation, Ncube on Monday encroached into the central bank mandate and imposed a number of controversial policies.

These include but not limited to the fact that all government agencies, including parastatals, will now collect fees in local currency, government rather than the Reserve Bank will buy the 25 percent of foreign currency exporters are required to surrender, the auctions will be limited to US$5 million a week, and all retained export earnings unspent after 90 days will be liquidated in the interbank market.

Some of the measures will come into effect on 1 June 2023.

Commenting on Ncube’s latest policies, former Finance Minister Tendai Biti said the move reflected a fall-out between RBZ and the Ministry of Finance.

“Mr Mthuli’s new measures are the latest expression of a desperate regime arrested by a panic attack, schizophrenia and cluelessness. In the main they are illegal measures which require Parliament Not only that they reflect a cataclysmic fall-out between the Central Bank and Treasury,” the Harare East legislator said.

“We have consistently argued that de-dollarization has failed and therefore the government needs to dollarise while floating the ZWL.Anything short of this will not work We have also argued that the auction system should be scrapped and therefore reducing the auction to US$5 million will not work.

“We have also argued that the Central Bank has gone rogue and needs to be replaced by a currency board.The new measures will not stop RBZ from conducting quasi fiscal activities or its illicit gold dealings.Deeper reform is required.

“We have also made it clear that the Treasury has no powers of assuming any debt from anyone, only Parliament has this power. Imposing on the taxpayer RBZ debt is immoral and illegal. The RBZ over the years has been at the center of major extractive behavior including borrowings and quasi fiscal activities.”

Biti added: “Assuming RBZ debt without exposing it to an audit is therefore a grand fraud on the people of Zimbabwe. Truth is an economy can’t be run be sporadic , adhocratic statements made outside Parliament and oblivious to previous policy pronouncements.The market requires rules and certainty

“We say to them again, dollarize and float Zimbabwean dollar, scrap export surrender requirements and auction system, pay workers and pensions in US$, pursue fiscal consolidation, Deal with corruption, deal with infrastructure and decarbonize. Most importantly, have free and fair elections.”

Meanwhile, prominent Harare economist Tinashe Murapata also believes that the latest measures by Ncube exposes a rift between the central bank and Treasury with the latter seemingly accusing the former of printing money.

“In the ever growing and now public spat between Monetary Authorities and Treasury it looks like Treasury has won. For now. At least on paper,” Murapata said in his analysis of the latest measures announced by Ncube.