Government should negotiate a rescue liquidity package from the region, particularly South Africa, to buttress economic stabilisation efforts and steer business growth, economic analysts have said. Contributing during a discussion to review the mid-term monetary policy statement organised by the Zimbabwe National Chamber of Commerce (ZNCC) Matabeleland Chapter in Bulawayo, economist Dr Nqobizitha Dube, said obtaining rescue package could be one of the options for resolving Zimbabwe’s currency challenges.
“We should start a negotiation process in the region and with South Africa to facilitate a liquidity facility that will allow Government to cover a majority of its costs,” he said.
“We know that a majority of its costs is in the civil service. If we can pay civil service wages for a period that is going to allow for economic stabilisation, say for a period of six months.”
Dr Dube said such a model would create a multiplier effect in the economy. He further challenged the private sector to lobby Government to come up with measures that would protect people’s savings and earnings.
“We need to protect people’s savings and earnings whose value under the prevailing economic situation have been reduced by the market by almost 300 percent,” he said.
Due to lack of protection of people’s savings, he said, in 2008 Zimbabweans lost their savings, an experience that the new political dispensation should not allow to recur. Dr Dube said it was imperative for the country to start considering freezing RTGS balances at a particular date and have these paid at an agreed rate although the exchange rate might not be at par with the United States dollar.
“But it can be agreed at a rate of say 1:2 or 1:1,5 and then those balances that come afterwards (after the stipulated date) could be debated and have to be sensitive particularly to those people who started saving in US dollars in the past in 2015, 2014 and so on,” he said.
“Once this has been frozen you can be realistic and say this RTGS is not working, it is not at 1:1 with the US dollar and let the market debase and destroy it whatever way that comes.”
A key highlight of the mid-term monetary policy statement presented by the Reserve Bank of Zimbabwe last week was the directive for banks to create separate nostro (external bank) foreign currency accounts (FCAs) and real time gross settlement (RTGS) FCA accounts.
Speaking at the same occasion, Mr Nathan Mugumisi, a lecturer and chairperson of the Department of Finance and Accounting at Lupane State University noted the separation of nostro FCAs and RTGS FCA accounts as a measure to ring fence the nostro balances for those who are generating foreign currency.
“From a business perspective, those who are generating foreign currency, the exporters for example, it is a positive move. It will increase access to US dollar because what has been previously happening is because of the parity I would generate foreign currency if I deposit it into my account. But it is diluted because everyone else, it was like would just ordinarily go into the now RTGS account,” he said.
Mr Mugumisi said the new monetary policy has the potential to enhance business confidence.
“In terms of real benefits there is potential to unlock expansion and growth in the economy especially for those companies that are exporting and generating foreign currency,” he said.