Man­gudya’s bond notes as­sur­ance wel­come

Chronicle (Zimbabwe) - - National News -

EDI­TOR — The Re­serve Bank of Zim­babwe’s as­sur­ance that they will not flood the mar­ket with bond notes is timely and well re­ceived.

In­deed there is no room for care­less flood­ing of the mar­ket with money that has not been earned or worked for, as what hap­pened dur­ing Gono’s term.

Our Govern­ment should not dare that dan­ger­ous route at all. Money by nature should mainly be a medium of ex­change and store of value.

What this sim­ply means is that where one has not worked pro­duc­tively, no money should be printed to pay that per­son.

On the part of our Govern­ment the ur­gent need to cut ex­pen­di­ture re­mains cru­cial for our eco­nomic re­cov­ery and the nec­es­sary abil­ity to fight sanc­tions in a sus­tain­able way.

The level of op­po­si­tion and ac­ri­mo­nious de­bate on the bond notes hinges on two main rea­sons. The pri­mary one is the fear of hy­per­in­fla­tion.

The sec­ondary one mainly from the op­po­si­tion politi­cians is that any mea­sure that may mit­i­gate our eco­nomic plight will give Zanu-PF po­lit­i­cal cap­i­tal.

So it is up to our Govern­ment to care­fully walk the is­sue of bond notes, to avoid a re­peat of what hap­pened with the bearer’s cheques, so that the public will take it as pro bono pub­lico!

The vexed is­sue of the size of the Govern­ment ex­pen­di­ture should be tack­led ruth­lessly to avoid con­tin­ued suf­fo­ca­tion of the wealth cre­at­ing pri­vate sec­tor.

All stu­dents of Public Fi­nance will be told dur­ing their first un­der­grad­u­ate lec­ture that Govern­ment ex­pen­di­ture is by nature waste­ful. It ba­si­cally means Govern­ment ex­pen­di­ture can be done with­out nec­es­sar­ily look­ing at whether it is adding value to the coun­try com­pared to what is done in pri­vate sec­tor en­ti­ties cost ac­count­ing.

In short, Govern­ment should not be com­pla­cent on its bloated ex­pen­di­ture, be­cause that would ex­pose it to care­less money print­ing again as what hap­pened in the past.

His­tor­i­cally, all coun­tries that ex­pe­ri­enced hy­per­in­fla­tion never went back to such a sit­u­a­tion and look­ing at this, his­tory ap­pears to be favour­ing Zim­babwe.

There is no need to panic. Cde Muzvina­vanhu

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