New Treasury chief pledges extensive economic reform

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Newly appointed Finance and Economic Planning Minister Mthuli Ncube, has pledged extensive economic reform measures expected to begin with scrapping of Zimbabwe’s surrogate currency, bond notes and reining in Government spending to restore macro-economic stability and sustainable growth.

Minister Ncube, a professor of economics and finance, said he already had plans and a vision of what reform measures the wobbly economy required and that the 2018 Mid-Term Monetary Policy to be presented by the Reserve Bank later this month will carry part of his immediate currency reform initiatives.

He made the remarks in an interview with journalists in Harare after the swearing-in ceremony for President Mnangagwa’s newly appointed 20-member Cabinet at State House yesterday.

He also said he needed to come up with a package of measures to address the country’s problems (building confidence through external debt arrears clearance, fiscal consolidation, improved tax collection and cutting budget deficit) and that he would appoint an international advisory board of eminent persons to help re-brand Zimbabwe, that has been shunned for nearly two decades.

Prof Ncube said while the bond notes will be among the first casualties of his planned onslaught on the current economic order; this will be instituted together with other critical reforms including fiscal consolidation and external debt arrears resolution.

He recently said the surrogate currency was bad money scaring away good money and was partly to blame for causing the acute shortage of the much sought US dollars in Zimbabwe.

“The issue of currency reform obviously will begin (soon) and will be underway; it is important that we do that, but currency reform alone is not adequate, it needs a second leg; it works with fiscal policy because the two are linked, so, fiscal reforms, fiscal consolidation together with currency reforms . . . work together to create stability. Because monetary policy and currency reform work together; they are two legs of the same body,” he said.

Zimbabwe is currently struggling with unsustainable external debt (about $11 billion including arrears), annual budget overruns ($2,52 billion in 2017) or 16,6 percent of 2017 National Budget, unsustainable trade deficits, slow economic growth, high unemployment and sluggish industrial production and poor infrastructure among others.

The new treasury chief said clearance of international debt arrears with institutions such as the African Development Bank and the World Bank was critical to restore international confidence in Zimbabwe.

“There is a plan that I have put in place and will accelerate to make sure that this debt issue is dealt with; it is one building block towards creating confidence; towards investors investing in Zimbabwe,” he said, adding domestic investors also wanted to see movement on the issue.

Source – Herald

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