RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya was yesterday involved in an explosive public spat with prominent economist Tony Hawkins over the economic projections for this year at a meeting with captains of industry.
At a CEO Africa Roundtable meeting held in Harare, Hawkins scoffed at projections made by Mangudya.
The central bank governor had projected that inflation would end the year between 20% and 30%, adding that economic growth for 2022 is forecasted to be at 5,5% from last year’s projection of 7,8%.
However, Hawkins dismissed Mangudya’s projection calling it “a dollop of Zanu PF propaganda” adding that inflation would end the year at between 80% to 100%.
Hawkins said the 7,8% growth Mangudya said the country had achieved was a “huge exaggeration” adding that the country’s growth for last year could have been about 6%.
He projected the growth for this year would be, at most, between 3% and 4%.
Mangudya and Hawkins disagreed on the necessity of using local currency which has lost value as a result of the volatile exchange rate.
This has brought a major disparity between the official exchange rate, which is currently standing at ZW$115 to the US dollar and the parallel market rate which is hovering around ZW$230 to the greenback.
Mangudya said the central bank was seized with the task of incentivising Zimbabweans to use the local unit.
However, Hawkins said the central bank governor was trying to preserve the local currency that nobody wants to use because of its depreciation in value.
“In 2018/2019 he (Mangudya) promised to preserve value (of the Zimbabwe dollar) but since then prices have gone up 3 000% and the currency’s value has devalued by 99%,” Hawkins said.
“He talks about people using local currency but if you go to my bank, the hole in the wall (ATM machine) tells you can draw 2 000 bonds (Zimbabwe dollars) which are now worth US$0,88,” Hawkins said.
Hawkins said it was dishonest for the government to call for the use of the local currency yet paying civil servants bonuses in hard currency.
Government is also charging some of its taxes in foreign currency as well as asking for US dollar payments for passports.
“If the Zimbabwe Dollar is so great, why do I have to use foreign currency? It is the inconsistency, the contradiction, the deceit, the dishonesty of the government. They do not believe their own untruths, why should we believe in it,” Hawkins fumed.
However, Mangudya said the de-dollarisation from the United States dollar to local currency will not be achieved overnight, adding that the country was in transition.
Hawkins said the RBZ should go back to complete dollarisation to enable economic stability.
“Ideally, something I would be enthusiastic about, is going back to the US dollar again to try and stabilise things as we did (during my time on the RBZ board),” he said.
Hawkins said even with inflation reduced from over 800% in 2020 to the current 60%, it was still one of the highest inflation rates in the world making stabilisation impossible.
Mangudya, however, said dollarisation was not feasible as this would cripple the country’s competitiveness adding that going back to dollarisation would be counter-productive to its efforts to stabilise the economy. – The Zimbabwe Independent
