Economist predicts more gloom

BY VIOLET GONDA HARARE - Reserve Governor Gideon Gono made some changes to the exchange rate policy when he announced his quarterly monetary review statement Tuesday, but economists say it's not sustainable by itself. Gono admitted that Zimbabwe had no attractive investment plan. He spoke a

bout the very serious levels of corruption, the lack of production on farms, the high levels of inflation and the issues destabilising the economy, such as the high interest rates and the shortages of foreign currency.

Nelson Chamisa, MDC Secretary for information said Gono had confirmed the MDC’s position that Zanu (PF) was at the epicentre of the national crisis.

“Gono was clear that the large-scale corruption that had eaten into every pillar of the state was not driven by the ordinary man but by known thieves in the top echelons of Zanu (PF) and government,” said Chamisa.

“The monetary policy statement further manifests the naivety of anyone to expect the monetary and fiscal policies to solve our deadening economic meltdown. It is clear that without a lasting political solution to the political crisis, merely tinkering with interest rates or introducing new bearer cheques will take us nowhere.”

The MDC believes that the governor himself should resign if he really believes his colleagues in Zanu (PF) are the major culprits in causing the state haemorrhage. “The governor should quit if he truly believes in his own statement that Zanu (PF) sharks are the major players in the pilferage of state assets, abuse of input schemes and the sabotage of the land reform programme, among other treasonous crimes,” said Chamisa.

Gono announced that exporters would convert 17% of their money on the open market rate in what is said to give them a slightly better exchange rate. But economist John Robertson said although this may give some relief to exporters, there is a need to dramatically increase the volumes of production of goods for export. He says this is essential as for years we have generated an economic environment, which is unattractive to new investment.

The Zim dollar itself has been plunging and this week crashed to an all time low. Analysts say this is the biggest single drop since the financial crisis began in Zimbabwe 6 years ago. Z$1000 is now worth just one American cent. It’s trading at Z$150 000 to the US$ on the black market compared to the official rate of Z$90,000.
Robertson predicts that the Zim dollar can go down much further to as low as Z$500,000 to the greenback.

He said inflation was causing the problems but added that inflation itself is caused by political changes that have been inflicted on the country since the land reform programme.

Although the government has refused to admit that the chaotic land reform programme contributed to economic crisis, Robertson says, “the main reason we are not producing is that skilled farmers were taken off the farms and replaced by mainly inexperienced people. And the government is not yet accepting that this was a bad mistake, blaming it on things like drought.”

The economist says unfortunately we are not deserving of support from international lenders because Zimbabwe has not taken the right steps to address the causes.

Meanwhile an IMF team is on a fact finding mission in the country, meeting with government and industrialists to discuss the financial crisis and look for evidence that the claims made by Gono and the Minister of Finance are true.

Robertson said, ” The IMF will find some difficulties believing some of the claims that were made by these officials because we have not addressed the basic causes of the problems.”

In his view the economic problems will only be solved when we change political decisions.

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