Zimbabwe: Finance Minister Ncube’s Measures Breach Law, Expose RBZ-Treasury Fall Out

Former Finance Minister Tendai Biti has said the latest series of economic measures announced by Mthuli Ncube expose the rift between Treasury and the Reserve Bank of Zimbabwe, adding the latter needs to be disbanded.

In the fresh set of measures the weekly auction will be limited to US$5 million, government agencies will ‘substantially’ collect fees in ZWL, all customs duties are now payable in local currency except designated ‘luxury goods’ and the liquidation of all the foreign currency earned through exports which remain unused for a period of 90 days among other measures.

Ncube’s latest economic stabilisation measures came barely two weeks after the Treasury boss scrapped duty on all basic commodities imports and ordered transfer of government loans from the central bank as part of a cocktail of measures aimed at strengthening the ZWL which is fast losing value.

According to Biti, Ncube’s policy statements attest to the deteriorating relations between the two financial administrators.

“Mthuli’s new measures are the latest expression of a desperate regime arrested by a panic attack, schizophrenia and cluelessness,” Biti said.

“In the main they are illegal measures which require Parliament not only that they reflect a cataclysmic fall out between the Central Bank and Treasury.”

Biti called for the disbanding of the RBZ and establishment of a Currency Board.

“We have consistently argued that de-dollarization has failed and therefore the government needs to dollarise while floating the ZWL.

“Anything short of this will not work. We have also argued that the auction system should be scrapped and therefore reducing the auction to US$5m will not work.

“We have also argued that the Central Bank has gone rogue and needs to be replaced by a currency board,” he said.

Biti underscored that the new measures will not derail RBZ from conducting questionable financial activities.

“The new measures will not stop RBZ from conducting quasi fiscal activities or its illicit gold dealings. Deeper reform is required. We have also made it clear that the Treasury has no powers of assuming any debt from anyone; only Parliament has this power.

“Imposing on the taxpayer RBZ debt is immoral and illegal .The RBZ over the years has been at the center of major extractive behaviour including borrowings and quasi fiscal activities.”

Economist Gift Mugano in his analysis called for the shutting down of the auction system.

“Auction allocation limited to a max of US$5m per week? That little? Why can’t you shut it down,” Mugano said.

“In view of the fact that the auction system has been reduced to US$5m per week, isn’t this clear evidence that the economy has dollarised.”