Zimbabwe Leaders Urge Calm As Economy Veers Toward Collapse

M. Ncube

Citing “these difficult times,” Kentucky Fried Chicken has closed its doors, prices are soaring, bread shelves are empty and fear is growing that an economic collapse is bearing down on a fragile population that was so full of hope not long ago.

Under cover of night, Zimbabwe streets fill with street vendors, supplying necessities that shops can no longer provide. But shortages have become so acute that even the street-sellers have run out of bread and fuel.

Energy Mutodi, deputy information minister with the governing ZANU-PF urged citizens not to panic.

“What we’re seeing is the result of speculative behavior,” he explained. “People are hoarding. But this should normalize in the next few days. Zimbabweans are safe under ZANU-PF. The government is committed to reforms, so we need people to be patient.”

But newly-appointed finance minister Mthuli Ncube doesn’t see a quick fix for a problem that began years ago.

Ncube blamed unsustainable government borrowing and the printing of billions of electronic dollars without real-world backing. In addition to the U.S. dollar that replaced the Zimbabwe dollar 10 years ago, two other currencies have been circulating alongside dollars. “Bond notes”, known here as Zollars or Zim bollars, were supposedly backed by real dollars as was the electronic money people used to pay for things in the absence of actual bills.

Last year, however, the value of the bond notes plunged to as little as 20 cents on the dollar. It was clear the parallel currencies were not at par.

“I don’t want to argue with the market,” Ncube said. “The bond notes will, at some point, have to be demonetized.”

The prospect of working peoples’ savings being sacrificed to correct the current crisis caused panic. Two days later, Mr Ncube backtracked. The government, he announced, would honor the parity of parallel currencies with dollars, after obtaining a financial guarantee from the Cairo-based Afreximbank.

“Indigenization” laws requiring Black ownership of platinum and diamond mines, would be scrapped, he promised. President Mnangagwa, for his part, offered to put a Trump golf course in the tourist town of Victoria Falls. “We’re open for business!” he declared.

Members of the opposition are skeptical. Tendai Biti blamed the disputed election that kept ZANU-PF in power. “You can rig an election, but you cannot rig an economy,” he said.

President Mnangagwa calls the current crisis as an inevitable consequence of reform. “The liberalization of the economy has its pains, and this is one of the pains that we are going to go through,” he said.

 

Source via Global Information Network

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