The Treasury chief was responding to questions from ruling party leaders on his plans to revive the troubled economy.
The decision to summon him to the meeting, alongside Reserve Bank of Zimbabwe governor John Mangudya, comes amid mounting fears among Zanu-PF bigwigs that the party could lose the 2023 general election owing to the catastrophic economic decline, which they fear is angering the population and alienating voters.
For a long time, some party heavyweights have been unsettled by Ncube’s economic policy thrust, which has seen inflation ballooning to 765% amid severe exchange rate volatility. Incomes and savings have been eroded, condemning most citizens to untold poverty.
Senior party officials have been unhappy with Ncube, accusing him of sabotaging the party through economic mismanagement. Mangudya’s monetary policies have also been subjected to critical scrutiny by party leaders anxious to retain political power.
Ncube’s policies, espoused in the Transitional Stabilisation Programme (TSP), are widely blamed by Zanu-PF hardliners for the deteriorating economy.
Criticism from the party hawks had somewhat subsided ahead of this week’s tense meeting after Ncube received strong backing from President Emmerson Mnangagwa, who recruited the economics professor from Europe where he was running a consultancy firm, and deployed him as a technocrat with solutions to fix the ailing economy.
But since coming on board as a cabinet minister, Ncube has been tiptoeing around political landmines at every turn, having introduced sweeping policy changes which have not improved the fortunes of a devastated economy.
Insiders said at this week’s politburo meeting, the big guns were once again trained on Ncube, mostly by party heavyweights who were booted out of the government during the September 2018 cabinet reshuffle. Led by Zanu-PF secretary for administration Obert Mpofu, they unequivocally stated that they feared the party would face difficulties in the election unless Ncube, as head of Treasury, urgently addresses the worsening economic crisis.
However, Ncube and Mangudya reportedly told the meeting in no uncertain terms that they possessed no magic wand to turn around the economy.
“The main issue was that of the economy and how prices of basic goods and services have skyrocketed so terribly since he became Finance minister. He was mainly taken to task by politburo members who are out of government over the state of the economy. The politburo members said they were deeply worried that this could alienate the party from potential voters because people are suffering,” a politburo member said.
The source said much of the criticism came from Mpofu and former finance minister Patrick Chinamasa, who demanded answers from the country’s two economic policy tsars.
“Most criticism came from Mpofu and Chinamasa, but all members basically expressed concern over the way the economy was being run. Generally, the two were being accused of working against the party. As you may know, to us the government is subservient to the party, which is then responsible for articulating these policies to the people. So what we have done now is to summon some of these ministers whose policies seem to work against Zanu-PF interests,” the party official said.
“So as the Finance minister and governor, we told them that they must fix the economy with great urgency since it’s their area of responsibility, but they clearly stated that things have gone out of hand and it would take a miracle for things to normalise anytime soon unless government, as a matter of urgency, develops a strategy to fund the productive sectors of the economy.”
He added: “Mthuli Ncube, in particular, said the economy was going to take a long time to recover, depending on the necessary interventions. However, he indicated that in the long run, his TSP would bear fruit, but you could see no one was buying that narrative.”
Sources said Mangudya was taken to task over the proliferation of illegal foreign currency traders who are being blamed for fueling inflation.
As of yesterday, the United States dollar was trading at ZW$80, with no sign of respite, despite several measures by the central bank aimed at containing the situation.
However, just like Ncube, Mangudya told the meeting that he, too, was running out of options to plug loopholes exploited by parallel market forex dealers, having already seen a myriad of his measures coming to naught.
“As governor, he was asked to act on the high level of instability in the exchange rate which has seen the local currency getting so severely corroded that salaries no longer mean anything. Mangudya said the major problem was that we are importing everything as a country and producing very little.
“He said, for instance, we grow wheat enough only to last three months and import wheat for the rest of the year, hence the high prices of bread. He told the meeting that unless government prioritised funding for the productive sectors of the economy, there was no hope,” a politburo member said.
“All raw materials are being imported. Mangudya stated that he was having a hard time trying to arrest the runway inflation and was running out of options after so many loopholes emerged as he sought to close one after another. He said players in the forex dealings have become so skillful that by the time they come up with a measure to control it, they would already have plotted a new way,” the politburo source said.
The Zimbabwean dollar has continued on a free-fall on the parallel market despite several measures by the monetary authorities in the past two years to shore it up, including the appointment of a special taskforce to stabilise the local unit.
Among other measures, the government in mid-2019 banned the use of foreign currency and re-introduced the Zimdollar which had been demonetised for more than a decade.
In March this year, Ncube announced he would introduce a “managed float” exchange rate regime, effectively abandoning strict control of foreign exchange by the central bank, in a series of currency reforms that have failed so far.
The move effectively brought the US dollar back into formal circulation, but the Zimdollar’s significant decline has gathered pace.