Our measures will work – Minister Ncube
Brian Rungano Temba
Finance and Economic Development Minister Professor Mthuli Ncube says the measures announced over the weekend to arrest market indiscipline will restore the local currency to its rightful place.
In an interview with Zimpapers Television Network earlier today Professor Ncube said the current exchange rate situation is unjustified as economic fundamentals are in place.
Domestically, Professor Ncube said our exports are high and we have a strong fiscal position yet parallel market is having an episode of uncertainty and speculative behaviour fueled by sentiment.
“There is however indiscipline in the market as agents are not towing the line in as far as rules and regulations on how to treat the two currencies are concerned,” he added.
Professor Ncube said the suspension of lending by banks, though painful was necessary to stop the bleeding of the local currency.
“We know some of the perpetrators who were using banks to borrow cheap liquidity with negative interest strengths.
We could have approached the situation differently and raised the interest rates but that would end up punishing honest business entities that are actually producing and paying their interests. Like I said it is a temporary measure and we will loosen up,” said Professor Ncube.
Professor Ncube said although businesses may feel the pinch for a while, Zimbabwe is not the first country on the continent to suspend lending.
Ethiopia last year suspended lending as it investigated issues of economic sabotage.
Minister Ncube said he is confident that the measures instituted will bring stability in the economy, as Zimbabwe has enough reserve currency to back a strong currency.
Professor Ncube said the RBZ has for the first time has reserves of US$1billion, which has not happened in years including during the GNU.
“The fundamentals for a strong currency are in place but yet we see this situation,” he said.
Professor Ncube said the time is not yet ripe for Zimbabwe to pursue a single currency regime as the de-dollarisation process is still ongoing.
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