Zimbabwe National Chamber of Commerce (ZNCC) says it is partially incorrect for President Mnangagwa to conclude that negative economic sentiments, not economic fundamentals are driving causing the depreciation of the local currency.
ZNCC was analysing new measures announced by President Emmerson Mnangagwa earmarked to restore confidence and curb market indiscipline.
The analysis says; “Government’s financing model for on-going programmes and developmental projects has been the major driver of the rapid depreciation in the local currency.”
“There is a hive of activity on the parallel market. Government is currently the major holder of Zimbabwean dollar deposits and lack of strategic disbursements of those funds into the market has been catastrophic. The Government has ignored this reality.”
President Emmerson Mnangagwa flanked by the RBZ Governor John Mangudya and Finance Minister Mthuli Ncube accused negative sentiments of bringing the country’s local currency down and argued that economic fundamentals put in place by authorities were right.
The Zimbabwean leader stated that economic fundamentals to support a stable domestic currency are evidenced by the amount of foreign currency being generated with the country recording a 53.5% increase in foreign currency to US$9.7 billion in 2021 from US$6.3 billion in 2020.
“The existence of strong economic fundamentals imply that the recent exchange rate depreciation is driven by factors outside obtaining economic fundamentals (This is comparable to the work of economic hitmen),” he said during the announcement.
Some of the measures announced by the Zimbabwean President include reducing the growth of the money supply to zero per cent and also suspension of lending by banks.
President Mnangagwa, flanked by the RBZ Governor John Mangudya and the Finance Minister Mthuli Ncube announced new measures to restore confidence and curb market indiscipline, two days before the Monday flopped shutdown.
Zimbabwe is currently with economic challenges with April’s annual inflation going up to 96,4%, up from 72% the previous month.
Economists and experts including Professor Steve Hanke translate this to the final doom of the Zimbabwean dollar which is now trading at above $400 to the United States Dollar on the parallel market.
Civil society organisations and workers’ unions are already calling for the government to act upon the rising costs of living with inflation eroding labourers’ salaries.
