Zim Needs To Remove “Senseless” Import, Exchange Controls To Fix Forex Shortages- Eddie Cross

Eddie Cross

Former MDC politician and economist Eddie Cross has called for the government to lift import control measures and to remove exchange controls to allow the economy to recover and to  fix shortages of foreign currency and basic commodities.

According to Cross, this is the only way the country’s economy will be able to recover to the same levels before Zanu-PF won the 2013 elections. Says Cross

When the Minister of Finance started to get us into the awful mess we are now in from a fiscal point of view, he also abandoned the freedoms we had secured in 2009 when the Zimbabwe dollar crashed.  Then we had no exchange control, we used hard currencies for everything, we ran a budget surplus and “ate what we killed”. There were no import controls and our foreign trade ballooned to US$6 billion a year and our GDP expanded exponentially by 14 times in four years.

Then they introduced import controls and then exchange controls and these are loved by everyone who cannot compete in an open market and all officials who then have the right to allocate “scarce” resources or licences. Suddenly we were back in the old Zimbabwe — we had to get an import licence to import stuff, the Reserve Bank drew up a ‘priority list’ for the allocation of foreign exchange. We created the new currencies — the bond note, the Treasury Bill and the RTGS dollars.

As the differentials in these new currencies widened, so the “shortage” of hard currency worsened and now we have shortages of nearly everything again and queues are emerging.  Why? Because we cannot breathe — we need the freedoms that were taken from us in 2014 and 2015. We need to take the Reserve Bank out of the exchange control business, we need to lift import controls.

Why are imported goods here three to four times more expensive than in Johannesburg? It’s because of the senseless controls and restrictions and the allocation systems for foreign exchange. Let the market allocate and price hard currency, let the market decide what to import. If we want to protect our local industries then impose a tariff on finished goods — make money from the trade, but make sure that all inputs for local business are available at the lowest cost possible.

If we do that, the shortages will vanish, hard currency will again be available because it is properly priced by the market and if the monetary policy committee is established as announced by the RBZ governor, even the queues outside the banks will disappear.Fiscal and monetary sanity will prevail again.

More: NewsDay