No signs of recovery yet for Zim economy

There are still no signs of recovery yet for the Zimbabwean economy in the New Year, which last year contracted by 6, 5 percent.

In his New Year message, President Emmerson Mnangagwa, however, said the economy would rebound in 2020.

The Zimbabwe dollar which ended 2019 at par with the South African Rand has since further depreciated while prices of all commodities have been going up since the year began.

Taking, for instance, R100 is now equivalent to ZW$158.

Last Friday’s hike in fuel prices also points to an economy that is not improving but deteriorating instead.

The increase saw prices for both diesel and petrol going up from ZW$17, 90 and ZW$17, 44 to ZW$19, 55 to ZW$18, 28 per litre, a 9 and 5 percent increase respectively.

The latest review of fuel prices by the Zimbabwe Energy Regulatory Authority (ZREA) follows the last increase in November last year.

All this is happening at a time when the government – which is struggling to pay civil servants – is in a deadlock with its employees over salaries government workers want to be indexed to the US dollar exchange rate.

In a bid to address cash shortages, Finance and Economic Development Minister, Mthuli Ncube, has said higher currency denominations including a ZW$50 dollar note will be introduced in the next few months.

“First of all, we are doing two things, we are injecting cash into the economy, drip-feeding the economy,” said Ncube.

“But we want to do it in a non- inflationary way where we are changing electronic currency for physical cash. Second thing, we are introducing higher denomination notes $10, $20 and $50 during the course of 2020.

He added: “That is what we would be doing; introducing higher denominations notes to make sure that it’s easy for citizens to transact. That is going to happen in the next few months.”

Economist, Dumisani Sibanda, the Zimbabwean economy was going through a very difficult period characterised by critical shortages of basic commodities.

“The economy is getting weaker with critical shortages which require foreign currency,” said Sibanda.

“This combined with low spending power will make the environment fragile.

He said it was high time the government prioritised the availability of food, fuel, and power.

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