Domestic resources, not financiers key to Zim survival – Chinamasa

Domestic resources, not financiers key to Zim survival – Chinamasa

HARARE, June 22 (The Source) – Finance Minister, Patrick Chinamasa said on Wednesday Zimbabwe’s economic salvation lies in effective utilisation of its domestic resources and not in the hands of multi-lateral financial institutions alone.

Chinamasa has been publicly criticised by some of his Cabinet colleagues for pushing for re-engagement with multi-lateral lenders such as the World Bank and International Monetary Fund (IMF).

But speaking at a poverty reduction forum, Chinamasa said it was in the economic interest of the country to explore all alternatives and engage possible partners to succeed in endeavours to breathe life into its stagnant economy.

“I have never said at any moment I am putting all my eggs in their (international finance institutions) basket. I have said we must put our eggs in all baskets that are available,” said Chinamasa.

“We must engage everybody, we must be a friend of everyone and above all, we must also look inward. All our reforms are geared towards unlocking domestic resources.”

Chinamasa said the international finance institutions, however, were critical as they possessed capital, which Zimbabwe was in dire need of.

“Capital is something that I do not have and all the engagement with the three multilateral institutions and any international organisations is all in order to unlock lines of credit to the productive sectors which is something that I do not have at affordable interest rates,” he said.

Zimbabwe has struggled to finance its economic revival plan, which required about $27 billion for implementation.

“If outsiders, like IMF, World Bank come, they must find us organised, well managed, they will never engage us at all if we are not well managed,” he said.

“Foreign direct investment is critical, it will come to complement any efforts that we make in the country.”

The country has failed to unlock support from the Bretton Woods institutions in nearly two decades, owing to a debt overhang of around $10 billion.

Boosting agriculture production, Chinamasa said, was also key in reviving other struggling economic sectors.

Addressing the question of current cash shortages, Chinamasa said Zimbabwe’s foreign currency exchange market had been “over liberalised,” opening doors for abuse.

As a result, government was working towards restricting use of foreign currency, especially on imports of goods deemed to be non-critical.

“Hard earned foreign currency comes from the export of five products, but what were we using it for? To buy anything that one could think of, something that is not critical to the economic development of our country,” he said.

“We want to use our hard earned foreign currency to buy only those things which can recover our economy, which can grow our economy.”

Importation of raw materials and equipment for industry sere top priorities, he said.

The appreciation of the United States dollar against the depreciation of the South African Rand, Chinamasa said, had further worsened the situation for Zimbabwe.

“We became a very expensive tourist destination and an expensive producer,” he said.

 

  • Doug Wezhira

    Chinamasa’s narrative is very clear that the so called bond note is the Z$ by another name. He questions the logic of using the USD to buy tomatoes or vegetables. How else are the transactions to be carried out in multicurrency environment? In his mind, it is clear that the bond notes should be used domestically and forex should be reserved for essential exports only. Now, if we follow the promise made by John Bonds, the maximum amount of the bond notes to be issued as an “export incentive” should not exceed $200 million, which is the maximum supported by the Afroximbank facility. $200 million is a tiny fraction of what is needed to support day-to-day transactions, unless of course the intension is to replace the entire multicurrency system with the bond notes, as implied by Chinamasa. The cat is out of the bag, hence, the transacting public has every reason to worry!