Scrap bond note and join Rand Monetary Union, Biti tells Ncube


HARARE – Former Finance Minister Tendai Biti says new minister Mthuli Ncube, who presents his maiden budget statement Thursday, should set an “underlying exchange rate” between the United States dollar and the bond note.

Biti, who had the tough job between 2009 and 2013, says the government cannot keep up the claim that the United States dollar is of the same value as the bond note without causing further harm to the economy.

“The legitimacy of today’s budget hinges on five issues. Firstly, it must define its currency of use. If it’s the USD, then it must define the underlying exchange rate. It cannot maintain the fiction of the normative one bond note equal to the USD. Anything short of this is a farce, a joke,” Biti said.

Biti also wants Ncube, who was appointed in September, to announce a roadmap to phasing out bond notes; cut funding to “vehicles of patronage” like command agriculture and also scrap the two percent tax on electronic transfers announced on October 1.

“Second, the budget must define a path to financial and monetary stability. The financial situation is a mess. The budget must demonitise the bond note, ring-fence balances and liberalise the exchange rate whilst preparing the country to join the Rand Monetary Union,” Biti tweeted Thursday.

“Third, will there be deep structural reforms particularly targeted at fiscal consolidation? Big issues are ghost workers who keep Zanu PF in power; command agriculture and parastatals which are vehicles of patronage.

“Fourth, the budget must scrap the two percent transfer tax. The tax is terrible economics. One does not raise taxes in a recession. It is cowardly and opportunistic.  Why target revenue when the real challenge is runaway expenditure? It’s cruel. People can’t use cash because the government stole our cash.”