Runaway Inflation Gathers Speed As Mthuli Firefights

By Shingirai Vambe

Zimbabwe’s currency has once again, depreciated, owing to high inflation. The economy is paying heavily, owing to corruption, poor governance practices, leaving the Southern African country burdened by huge foreign debts.

The economic score for Zimbabwe currently stand at 173 in the 2022 index.

Citizens are failing to appreciate the banking system, banking should see one saving, but alas, little deposits of the public is eroded.

Investing locally faces difficult policies which are not addressing the bread and butter issues.

The Finance Minister, Prof Mthuli Ncube presented a mid-term budget review before Parliament recently, it failed to bring any cheer. The budget was described to be of no value as it failed to address fundamental issues relating to the exchange rate, salaries of civil servants, government expenditure and tax.

It was described by many as a big yawn.

According to statistics and comments from various analysts, Zimbabwe is said to have recorded a sharp 10.9 point overall loss of economic freedom since 2017 and has sunk lower in the repressed category having poor or weak open markets.

Economic analyst, Vince Musewe recently shared that, despite increased exports earnings, there is no visible economic growth on the ground.

“Export earnings are earned by conglomerates and cartels. There is zero trickle down effect, June 22% up from last year means nothing to many,” said Musewe.

Former Minister of Finance, during the 2009 to 2013 Government of National Unity, Tendai Biti, said the Mid-Term Budget Review by Mthuli was just a waste of time and resources as he missed the opportunity to resurrect the economy of Zimbabwe.

He told Post On Sunday Newspaper that his expectations were to come up with extremely populist, but costly fiscal measures, as 2023 draw closer and nominal relief of tax brackets in other sector of the economy,

“It was painful to indulge in an hour of pointless, tired monologue, an absolute damp squib. A huge opportunity was missed to address fundamental disequilibrium in the economy centered on 7 key issues which are hyperinflation, exchange rate, wages, low production and output, national debt and tax reform,” Biti said.

The recently posted and shared first quarter 2022 performance report equally highlighted challenges faced in the Zimbabwean economy.

The sector earlier recorded good performance due to Covid-19 when the whole economy resorted to the use of digital platforms including the education sector, and the downward performance was said to be a reflection of the whole economy across sectors and citizens making priorities with their earnings.

Regulated fees which are denominated using the official bank rates have had their impact on the performance of companies in the self-dollarized economy.

Zimbabweans have since requested the reintroduction of US dollars on salaries due to the fact that everything, goods and services from a 70% privately owned economy is pegged in US dollars including government institution and parastatls also charging in US dollars.

Due to high interest rates and tax, Zimbabwean are slowly abandoning the banking culture, only for the purpose of borrowing expensive loans and receiving their salaries, otherwise bank charges have in the years gone up drastically, recording huge profits at the expense of the citizens.

Analysts have however stated that the current surpluses and profits being recorded by companies and government institutions are artificial because of the rate which is being monitored by the Reserve Bank of Zimbabwe (RBZ).

Prices of goods and services are soaring to an ordinary citizen who survives through vending.

Majority of citizens are working and operating their small businesses and charging their goods and services in US dollars.

Despite reports of growth in the economy, big businesses have since closed, wholesalers are retrenching and downsizing, creating an increase to informal trade.

The bleeding Zimbabwean economy has left many wondering if it’s really an economic issue of none or poor performance or politics at play.

With an increase of citizens migrating to other countries because of the continuous economic meltdown, an estimated figure of 2.5 to 3 million Zimbabweans have left the country over the years and, Diaspora remittances have risen up to US$1bn.

These remittances have since been playing a big role which also sustained lives of people in Zimbabwe, they created a huge consumer base within informal and small communities’ economies.

It is common today, to see school going children roaming the streets or selling anything that goes along the road sides. Zimbabwe has now become a nation of hawkers and vendors with those who used to be middle class joining the bandwagon selling from their car boots everywhere.

With US$1 trading at ZW$500 at the official bank rate, the parallel market trades at ZWL$ 800 to ZWL$950 depending on mode of exchange.

The country now has several different exchange rates functioning simultaneously.

The swipe rate stands at $950 with high interest rates put in place by the the finance ministry and the Reserve Bank of Zimbabwe.

With the buying rate varying from city to city and urgency of surplus.

Only in Zimbabwe does a greenback dollar have different values.

Mthuli seems to be struggling, he, however, remains resolute in the face of an avalanching economics at play.

He seems to be reading from a separate hymn book than one at play on reality lived experiences of the majority who earn local currency, yet buy fuel in US denominations, seek hospital treatment in the greenback and pay rentals in the same.

Where does he think the majority get that needed stable currency?

You know where?

The demand sends inflation soaring to new heights weekly.

Before year-end, the 1000 mark will equate US$1 and businesses will continue to close, making Zimbabweans poorer than before.

Cry the beloved country.