Austerity a necessary evil: Cross backs Prof Ncube

Eddie Cross

ECONOMIST and former MDC legislator, Mr Eddie Cross has come out in full support of the Government’s austerity measures saying if the economy is to heal, it has to undergo painful processes.

In an interview on the sidelines of the commissioning of ZimCoke Private Limited in Redcliff recently, Mr Cross  said he was in total support of Finance and Economic Development Minister Prof Mthuli Ncube’s austerity measures saying the economy was about to reach the turnaround point.

“I am in support of the Minister’s austerity measures and also the fact that he is talking about a new currency by August or September. We have to have a currency for basic trading purposes. How do people trade, we ought to have a currency. The Minister wants to do it in August, September, I personally support that thinking,” said Mr Cross.

He lamented unnecessary speculation saying it was a major cause of unjustified price increases.

He, however, said the economy had reached a point where it was making a positive turn, adding there was need to stop the unwarranted speculation by fixing the exchange rates.

“The economy is about to turnaround. We need to stop the speculation that’s going on, there is no justification for the current exchange rates, not at all. Rates should be around, 2,5 to 3, but how do you justify the current exchange rate,” he said.

He said Government has to go back to basics and employ the fundamental economics a move which will propel the economy turnaround strategy.

“We need to fix the fiscal deficit, people do not have spending power, imports are down 20 percent, I think we are well in into the austerity which Mthuli talked about. What we got to do now, urgently, is to get stability in the forex exchange rate market and that way, inflation will drop, prices will also come down,” said Mr Cross.

Recently, Prof Ncube assured the nation that the period of austerity will be short and certainly not exceed one year as the positive fruits of belt tightening were already being realised.

Prof Ncube pleaded with businesses to be patient and desist from wanton price increases and profiteering as Government puts in place the building blocks. 

Prof Ncube said key pillars towards the desired transformation included among others infrastructure development, strengthened governance, improved democratic space, improved social services, strengthening of public institutions, improved ease of doing business climate and fighting corruption.

He said what was encouraging was that Government had so far made great progress towards achieving these goals.

Prof Ncube said the Transitional Stabilisation Programme (TSP) was a short term blue-print that has a mandate to stabilise economic fundamentals before its long term successor policy guidelines take shape.