Mthuli Ncube re-dollars – Bulawayo24 News

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The GOVERNMENT yesterday brought back the US dollar as legal tender to stem rising inflation and restore confidence in the economy, but critics say the move will lead to more demands for wages and salaries pegged to the greenback.

Finance and Economic Development Minister Mthuli Ncube also gave housing loans to wayward civil servants in the country, but more than doubled interest rates to 200% to render the incentive moot.

President Emmerson Mnangagwa has fought to revitalize an economy that has suffered decades of decline, while the financial chaos that characterized the last years of the long reign of former President Robert Mugabe is once again in evidence.

Inflation, at 191.7%, is at its highest in years while the local currency has weakened to nearly $700 against the greenback. Price hikes have become a daily occurrence, leaving desperate workers unable to cope as wages and salaries do not keep pace.

While the US dollar is already widely used, the government has said it will enshrine its use in law to provide market confidence.

“The market has no confidence that the multi-currency system is here to stay for the foreseeable future. To eliminate speculation and arbitrage based on this issue, the government has decided to integrate the multi-currency system and the continued use of the US dollar in law for a period of five years,” Ncube said.

Critics said the government’s decision would lead to prices being fixed in US dollars, with the local currency used for change, as is already happening.

In a statement, the opposition Citizens Coalition for Change said: “The major policy interventions announced by Ncube are a reiteration of policies that already exist and have failed to curb hyperinflation and stabilize prices. Unfortunately, the The measures announced today do not have the capacity to turn the beleaguered fortunes of the Zimbabwean economy The alleged entrenchment of the multi-currency system and the interbank market in law is not new.

Analysts said yesterday that interest rate hikes will trigger higher inflation, deter workers and industries from accessing loans and pass on the costs of goods and services to consumers who have resorted to the loan to finance their daily expenses.

In its justification for the interest rate hikes, the Reserve Bank of Zimbabwe (RBZ) said it would help mop up excess liquidity in the market and curb speculative borrowing.

“The Monetary Policy Committee has reviewed interest rates and statutory reserves with effect from July 1, 2022 as follows – increasing the bank’s policy rate by 80% to 200% per annum,” said RBZ Governor John Mangudya, in a statement shortly after Ncube suspended loans for civilians. servants’ quarters.

Ncube also announced further monetary and non-monetary support measures for civil servants following a strike last week by nurses and teachers.

His (Ncube’s) measures were, however, a repeat of some of the civil servant incentives announced by the government last year.

“In particular with regard to the health services sector, the government has increased the health sector specific allowances which apply to doctors and laboratory scientists,” Ncube told the conference. hurry.

“In addition, the government has reviewed non-monetary benefits for the health sector, including: provision of institutional housing for health workers starting in Harare and Bulawayo; the provision of housing loan guarantees; the provision of efficient means of transport, starting with the hospitals fill the gaps in the cafeteria system and restore the system; and local production and sourcing of uniforms for health personnel,” he said.

Regarding teachers, Ncube said, “Payment of performance awards which had been withheld due to financial constraints, has been reinstated and these will now be processed as of July 1, 2022. To this end, members will now placed on their correct job
grades.”

Ncube also said the government will pay school fees for up to three biological children per teacher family, adding that the government will also provide 34,000 homes as institutional housing for teachers.

Yesterday officials dismissed Ncube’s measures to shield them from economic challenges saying there was nothing new in its promises.

“The measures announced by the minister show clear disregard for the plight of civil servants and teachers,” said Zimbabwe Union of Educators President Tafadzwa Munodawafa.

“Teachers are a real concern where the poverty line is above $130,000 and a 100% increase in their salaries doesn’t even begin to cut it. Our suffering is real. Our authenticity is real too. The teachers showed a desire to serve their clients before their needs. However, we are concerned about the lack of authenticity on the part of the government across Mthuli. It is clear that teachers are being punished for having their hearts in the right place,” she said.

Ncube also announced incentives for MPs, including importing second vehicles duty-free.

“The government has introduced a duty-free importation of a second motor vehicle for use by parliamentarians in their public service work,” Ncube said.

Economist Farai Gwenhure said the government was running out of ideas.

“The government hasn’t announced anything new except raising interest rates and introducing legislation to make the US dollar legal tender for the next five years. However, the measures have not addressed the root causes of inflation, i.e. price indexation to local currency. As long as the country uses the dual pricing regime, workers’ incomes will continue to erode,” he said.

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