Govt on course to rein in inflation
THE Minister of Finance and Economic Development, Professor Mthuli Ncube says Government has moved milestones with regard to the currency reform agenda as well as paving way for the much needed private sector-led economy.
Responding to questions during an interview with Bloomberg on the sidelines of the ongoing World Economic Forum in Davos, Minister Ncube indicated that the Government has made great strides in trying to arrest challenges emanating from rising levels of inflation as well as in creating an environment conducive for Foreign Direct Investment.
“Investors should actually believe us because we are walking the talk. We said that month-on-month inflation is going to be stabilising and that is what is happening. We said this when it was at 17 percent and it has gone down to 16,55 percent and so it is coming down slowly,” said Minister Ncube
“Of course, year-on-year inflation will remain high but that is expected when you are liberalising a country’s currency in trying to find an equilibrium and a footing.”
He said the local currency has been stable in the last couple of months and has stopped the transmission of currency volatility into pricing. It took 38 days for the exchange rate to move from 15 to 16 and 37 days to move from 16 to 17. Before that it would take less than a week to move by a Z$1.
“We are on our way to deal with inflation. It will take time but we are heading there,” said Minister Ncube.
He further noted that as both a reactive and proactive measure, the Finance Ministry will consider introducing higher denominations to smoothen transactions by the public. He indicated that denominations of $10, $20 and $50 will come in a few months and released into the market with caution to avoid further fuelling inflation.
Privatisation of SOEs
The minister indicated that the Government has made great progress with regard to the planned privatisation of selected parastatals, which include TelOne and NRZ. The planned privatisation is part of the strategy to introduce and promote a sustainable private sector-led economy, in turn imperative for investment promotion. He further hinted on plans to even privatise the Government’s banking assets and progress has been made to that effect;
“We are making decent progress. We have done the first step which was to decide which ones should be partially privatised, which ones should be liquidated, which ones should be departmentalised and which ones should not even be touched. So, we have done all that in 2019.
“In 2020 this thing is about not doing the transactions in terms of liquidation in terms of partial privatisation. We see us making progress in partially privatising the telecoms company, the motor vehicle assembly company, capitalising our Silo Industries which is providing affordable basic commodities.
“We will be privatising the banking assets that we own. We have got to make a lot of progress this year and we want to make sure that we really create a private sector-led economy in Zimbabwe. It’s so surprising that actually we have improved in terms of the environment for doing business by 15 places last year and we are determined to keep improving. We want to improve the environment for doing business. And privatisation is part of that story, creating a more private sector-led economy,” said Minister Ncube.
Food imports
With regard to the food situation, the minister indicated that the Government is ready to fight any risk of famine that may arise from the protracted effects of Cyclone Idai and the drought that ensued during the 2018/2019 farming season. He pointed out that contracts have been and are still being signed for the importation of food from various countries and more particularly from the Atlantic.
He indicated food is already being imported from South Africa and Tanzania via Zambia. He also applauded the support from the international community to that effect. Further, he noted the Government unveiled the grain subsidy programme to ensure food is both affordable and available to all the citizens.
“We are doing everything we can and at the same time we also appreciate the support of the international community. Contracts have been signed, contracts are being signed and we are ready. We are shipping maize from the Atlantic. Ships are delivering in Beira and we move the consignment by rail and trucks up to Zimbabwe. We are moving food from South Africa and we are moving food from Tanzania via Zambia and we are well organised.
“We are also subsidising some of the grain so that our citizens can afford. This is part of the Government subsidy to make sure food is available in terms of pricing and in terms of access, as well as availability in shops. We are not at the risk of famine and we are well organised,” said Minister Ncube.
Among other things the minister spoke of the Government’s commitment to engage with civil servants and provide sustainable wages. He implored the private sector to follow suit by awarding sustainable wages.