Biti responds to Monetary Statement, warns of hyperinflation and shortages
FORMER Minister of Finance Tendai Biti has warned that hyperinflation, shortages and queues reminiscent of the 2008 era are coming soon as a result of the policies in the Monetary Policy Statement (MPS) announced today in Harare.
Reserve Bank of Zimbabwe Governor John Mangudya announced the 2019 Monetary Policy Statement on Wednesday afternoon.
In his initial reaction to the MPS, Biti, who is also the opposition MDC deputy national chairperson, said: “Modern functional states are founded on trust and transparency. That clearly is not part of the DNA of ZANU-PF .
“The regime today disingenuously and mendaciously de-dollarised the economy by informally re-introducing the Zimbabwe dollar now called the RTGS Dollar through the back-door.
“It is a disaster to embark on currency reform in the absence of key fundamentals to back that currency. These include market confidence, reserves, a decent Capital account, and a stable macroeconomic environment. This is elementary.”
As a result, Biti said the crippling shortages which hit the nation in the 2007 – 2008 era are set to return.
“Regrettably, the economy now enters another period of self induced shocks that will see salaries and values being devalued, hyper inflation, shortages and queues. What a dog’s breakfast.”
Earlier in the day, Biti had called for the total ejection of the bond note and a full return to the US dollar.
Said Biti: “Today’s Monetary Policy will lack the thunder of a new currency after we caught them with their pants down.A decent Monetary Policy should however 1) demonetize the bond note 2) ring fence RTGS balances 3) strengthen multi currency regime 4) remove export retention 5) stop quasi fiscals (activities),” said Biti.
He however suggested that floating the bond note against the US dollar will be a matter of treating the symptoms and not the cause. He called for the total recall of the surrogate bond note so that the nation completely trades in the greenback.
“Liberalizing or floating exchange rate is dealing with symptoms. Bond note should simply be ejected . Besides bond note and its fictional parity is set as law in the RBZ Act so only Parliament can float or liberalize exchange rate.” — ZOOMZimbabwe