By Anna Chibamu
TOP economist Eddie Cross painted a bleak picture of Zimbabwe’s battered economy on Monday, but said its dollarization would destroy the country’s reindustrialisation momentum.
Speaking to NewZimbabwe.com on Monday, Cross said that although the country’s inflation rate was on a “worrying” increase, the much-appreciated US dollar was not Zimbabwe’s solution to its economic crisis.
“We face very serious difficulties at the moment, and I fear that the recent actions of the government have not helped,” Cross said of President Emmerson Mnangagwa’s decision to temporarily halt bank lending.
The government’s measure has resulted in huge losses for businesses and aggravated exchange rate disparities.
“Inflation continues to rise, very disturbing, very quickly. The parallel the market rate continues to depreciate, now approaching ZW$500.
“I don’t think we should dollarize. I will go the other way. We will not dollarizeIThis is government policy and I agree with that view.
“If you go to one of our neighboring countries like South Africa the Rand is used, Zambia uses their Kwacha, in Botswana they use their Pula, and in Mozambique they use Mozambican metical. These countries use their own currencies and do not use the US dollar (USD).
“We have to use our own currency and that is the key to keeping our sector productive. If we dollarize, we destroy our competitiveness,” Cross said. added.
His comments, however, will not be welcomed by civil servants who have threatened industrial action if the government does not pay them salaries in the most stable US dollar.
Their Zimbabwe dollar salaries have been eroded by massive inflation, with most earning around Z$19,000, the equivalent of less than US$50 at the prevailing black market rate.
Zimbabwe’s inflation stands at 244%, ahead of war-torn Ukraine and Syria; and topped economist Steve Hanke’s world rankings.
Cross said Zimbabwe’s fundamentals supported the use of the Zimbabwean dollar, further referring to Finance Mthuli Ncube’s surplus.
Without specifying, he blamed the current crisis on the way the country exchanged its foreign currency.
Said Cross: “Tthere is nothing wrong with the economyyouthe fundamentals are solid herewWe have a balance of payments surplus, we have a surplus in our budgetary accounts and there is no reason for the country to be in this situation.
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“We do not exchange our foreign currencies correctlyIIf we did, Zimbabwe would quickly be a different country.”
Cross, a former MDC lawmaker, said the time has come for the old and the young should now take the reins of the economy as has happened in other developing countries.
“A lot of changes are needed in the corporate sector, but this concerns young people.
“The main change I see in the business sector is great, I want the younger generation to take control of the economy, It’s their time. My time is up.
“The new generation must rise up and take the lead. It happened in China and Rwanda and soon you will see the results. To cross said.