FORMER Finance Minister Tendai Biti has called the Governor of the Reserve Bank of Zimbabwe a fool, saying his monetary policies are insufficient to control inflation.
Biti said this in a scathing attack on Mangudya’s “shallow” monetary policy statement released Monday during an interview on New Zim TV’s first weekly show, The Agenda.
Mangudya, in the monetary policy statement, claimed he was doing enough to bring the country’s inflation rate down to 35% by the end of the year.
But Biti dismissed those claims saying if anything, inflation will continue to soar.
He predicted that at the rate inflation is hitting the economy, the exchange rate will peak in December at $1:$1,000 ZW.
Biti said President Emmerson Mnangagwa and his administration practice feja feja economics, a slang for uncoordinated and disorderly financial management.
He also coined the word ginyanomics to describe the type of economics practiced by the government of President Emmerson Mnangagwa.
Biti also questioned Finance and Economic Development Minister Mthuli Ncube’s decision to keep the Zimbabwean dollar as the country’s main currency at a time when it is steadily losing value and fueling inflation.
“I suspect the exchange rate by August will be between US$1 and ZW$400, which is a big depreciation,” Biti said.
“Very soon the parallel rate will be US$1 to ZW$500 but they are scared of that especially a year before the election so what they are doing is tightening the RTGS dollar spigot by limiting the withdrawals and closely monitoring company current accounts to ensure there are no moves to feed Fourth Street (illegal exchange rate market).
The vice president of the Citizens Coalition for Change (CCC) said Mangudya’s MPS was based on Ncube’s misguided claims that the country was still on the mend by pointing to local currency indices that did not reflect the ordinary citizen.
“The elephant in the living room is the dual economy that Zimbabwe has, Mthuli claims to be administering a certain economy, prescribing solutions to a certain economy but the rest of us are in another reality, his is a distorted reality, a fake field,” Biti said.
“There’s a US dollar economy that most of us live in, where stores don’t accept anything but US dollars, where tuition is paid in US dollars, where fuel is paid in US dollars, where the rents are in US dollars, where the houses are sold in the US and that’s the bulk of the economy Mangudya and Ncube are in this artificial world of this Zimbabwe dollar economy, so when he pronounces monetary policy, he pronounces it for this small, non-existent economy that is controlled by cartels,” he said.
“Those who say inflation has gone down should be asked about the economy they are measuring, will they be measuring the economy in US dollars or the artificial, fake, non-existent dollar Zim economy. It’s a cantankerous economy , someone once called it a casino economy but there are rules in a casino…it’s a sewer, in a sewer you can’t measure the extent of the stench, you can’t not measure the extent of the flow. do not touch by a long mile.”
Ncube abandoned the use of the US dollar as the country’s primary currency in 2018, reintroducing the Zimbabwean dollar against the advice of economic experts including Biti.
They pointed to the lack of fundamentals that support a local currency and predicted that it would lose value.
Biti suggested that Ncube should abolish the currency floor and avoid impending disaster similar to the 2008 crisis by dollarizing.
“Dollarize but keep the Zimbabwe dollar, abolish the auction floor so it finds its natural mark in the market. They dedollarized when the fundamentals were not in place. thing…what you can do is dollarize yourself, bring in your currency to serve as currency, as a transactional instrument and not as a store of value, the value continues to be held by hard currency. If Mangudya thinks he can do it, then he’s a fool,” he said.
“It’s a question of trust, we don’t trust Mnangagwa and this man with a strong propensity to lie Ncube.”
Biti suggested a return to what he called the “We eat what we kill” principle of strict cash budgeting if Zinbabwe were to get back on its feet.
He also argued that Zimbabwe has enough reserves in US dollars to use the currency as its main currency, pointing out that the government has also moved away from charging for services in US dollars.
“I always say Ginyanomics doesn’t work…there will be an implosion. Every tax is now in US dollars, even license plates are in US dollars, passports are in US dollars, so these are people completely dishonest people, they are complete liars, they are necrophiliacs, it’s a disaster.”
Biti told New Zim TV that Ncube had no surplus to discuss as it was calculated in the local currency as parliament continued to take on a ZW$3.4 billion debt from the central bank despite the excess.
Biti served as finance minister under the government of national unity (GNU) between 2009 and 2013.
This interview is available on the NewZimbabwe.com Facebook page https://www.facebook.com/newzimbabwecom/videos/370133857827042/ and on the NewZim TV YouTube channel: https://www.youtube.com/watch?v= xxRUXUbjJTw