ZAPU has accused the government of reducing the supply of the Zimbabwean bond notes on the market in an effort to manipulate the exchange rate.
The opposition party said the government is aware that the pricing of goods and services locally was indexed to the exchange rate, so when the value of bond notes fell, prices shot up as traders needed to be able to restock raw materials and goods based on the new exchange rate.
“So, the government is trying to manipulate the exchange rate,” said ZAPU National Spokesperson, Msongelwa Ndlovu while commenting on the latest economic measures announced by the Minister of Finance and Economic Development, Professor Mthuli Ncube.
“The reintroduction of the US Dollar as legal tender is not a new measure, neither is it economic wizardry by this beleaguered government. We are simply moving in circles to destination Armageddon.”
Ndlovu said the excess supply of the Zimbabwean bond notes was pushing up the price of the US dollar, so the government was trying to reduce that supply in the market.
“Just recently, the same government banned banks from extending loans to corporates after realising that companies were merely borrowing billions of Zimbabwe dollars for speculative purposes and black-market trading,” he said.
In efforts to mitigate against that challenge, the finance minister came up with these ‘midnight measures’ to reduce the supply of bond notes in the market, claimed the ZAPU spokesperson.
“They anticipated this would reduce the price of the US Dollar on the market but failed dismally leading to the reversal of those measures, which threatened to collapse the entire economy of the country,” Ndlovu said.
“The latest measures are a similar attempt to control the price of the USD by limiting the supply of the bond notes on the market. By increasing the interest rate to 200 percent, they hope to make it too expensive for companies to borrow money. In addition, they have introduced a Statutory Instrument to make sure that financial institutions recover loans in the same currency the borrower received.”
Ndlovu explained the move was designed to limit the amount of money available in the market for these companies and individuals to buy the US Dollar.
“Yet again, this will not work as it’s simply command economics where the government is dictating to market forces when the opposite should prevail. Zimbabwe has three exchange rates. Today’s rate is US$1: ZWL$346 on the auction market, 362 on the interbank rate and 675 on the parallel market. The spread between the rates is massive creating an opportunity for arbitrage,” he said.
“Those companies and individuals that are politically connected will buy the forex at the auction and use it for speculative purposes. The government has no incentive to correct this anomaly created by a triple exchange rate policy because they make money from it.”
As if the triple exchange rate looting platform is not enough, the ZAPU spokesperson claimed the government has designed yet another theft enterprise in the form of gold coins.
“Zimbabweans must understand that money serves two primary functions. The first as a unit of exchange and secondly as a store of value. The discredited bond note now serves the former more than the latter. That is why the government itself now prefers to be paid in USD. People have been resorting to buying the USD to store value,” Ndlovu said.
“Government wants to reduce the demand of the USD by diverting that demand that was intended to be a store of value into gold coins. The assumption is that the bond note is dominant in purchases. People want USD not for transactions but for store of value. So, if you offer them gold, they will switch to buying gold.”
The finance minister hopes this would reduce the price of USD thereby protecting the value of bond notes and therefore inflation, added Ndlovu.
“But we all know that very soon we will have a glut of gold that is mixed with steel,” he alleged.
“The minting process will be a scandal of a grand scale.”
The spokesperson said ZAPU had a better economic plan that creates alternative economic opportunities within rural district councils driven by natural resources such as land, solar energy, tourism, food production and value addition.
“This will not only lead to urban to rural migration which will decongest our overpopulated cities, but increase our productivity for local consumption as well as export. This will also increase demand for goods and services,” Ndlovu said.
