Addressing the media in Harare yesterday, the buoyant Ncube also predicted that the Zimbabwe dollar would continue to perform well against major global currencies, including the much-coveted United States dollar.
This comes as the country is beginning to enjoy relative economic stability, following the recent implementation of a raft of measures — including the introduction of the foreign currency auction system in June, which has reined in the hitherto rampant forex parallel market.
Ncube said yesterday earlier fears that coronavirus would completely destroy the local economy had fortunately not been realised, with Zimbabwe faring better than many other countries around the world against the global pandemic.
“If you look at other countries like South Africa, the United Kingdom and the USA, companies are shutting down because of Covid-19, but not in Zimbabwe.
Dailynews Mobile news
“I am seeing that volumes are going up, or maintaining or recovering. I am not seeing a similar pattern of companies shutting down.
“That’s why our prognosis is that the impact of Covid-19 overall in Zimbabwe is not as deep as in other countries,” Ncube said.
“That is why I’m now more bullish about economic recovery than I was deep in the middle of Covid-19, because back then we had a lockdown and we didn’t know how it was going.
“If we can also have a good rainy season, then we will import less food next year and be more self-sufficient in the food sector,” he added.
Ncube attributed the current improved economic performance to the re-introduction of the Zimbabwe dollar last year, as well as improved foreign currency inflows.
“For 10 years we did not have a domestic currency and what it meant was that we had no full monetary policy.
“So, we had to restore monetary policy as the second leg of the fiscal management tools, that involved introducing the Zimbabwe dollar.
“We did go through steps of fine-tuning, but clearly we have a domestic currency and it is now stable,” Ncube said further.
“The domestic currency has enabled us to improve our competitiveness. I have actually been amazed by the level of import substitution, especially in the food sector.
“If you go to supermarkets you will see a lot of domestic products that have come out in the last two-and-a-half years and this speaks to the success of introducing the domestic currency,” he also said.
This comes as the Zimbabwe dollar has lately been holding steady against major global currencies following the Reserve Bank of Zimbabwe’s (RBZ) launch of the foreign currency auction system in June, which has helped to stabilise prices of most basic goods.
Since the launch of the auctions, the local currency has moved from 63 to the US dollar to the current 81 — while prices have been stabilising in shops after a bout of steep increases fuelled by the collapse of the local currency then against the US dollar.
When Ncube unveiled his Transitional Stabilisation Programme (TSP) in October 2018, which ends in December, the Treasury boss was heavily criticised at the time for his blueprint — which saw him, among other things, introducing an unpopular two percent transaction tax, which critics said had worsened ordinary people’s economic hardships.
The TSP’s introduction also kicked in at a time that Zimbabwe began to experience its worst economic crisis in a decade, triggering steep prices of basic consumer goods — amid rising inflation, shortages of fuel and critical medicines.
Yesterday, Ncube predicted a further strengthening of the economy on the back of increasing exports and higher inflows of foreign currency from Zimbabweans in the diaspora.
“We have tobacco in the agricultural sector and cotton, and these are driving export growth and those numbers are going up.
“We are seeing the reduction of imports also. Because of the domestic currency and import substitution, the import growth rate has slowed down relatively speaking.
“The third factor is the capital inflows from the diaspora. These have increased by 33 percent and they will result in a current account surplus of $1,2 billion and we think this is conservative,” Ncube said.
This comes as the World Trade Organisation (WTO) has commended ongoing efforts by authorities to stabilise the country’s currency and economy.
Speaking during the recent online review of Zimbabwe’s trade policies and practices, WTO Trade Policy Review Body chairperson Harald Aspelund commended the government’s efforts to stabilise the local currency.
“Members commended Zimbabwe’s efforts to stabilise its currency, noting that the forex regime should not act as a disincentive for investors and exporters.
“Accordingly, they welcomed the introduction of a weekly forex auction by the Reserve Bank of Zimbabwe in June 2020, and they sought information regarding further measures to ensure that the forex market operates in an open and transparent manner.
“This could contribute to bringing down inflation from its currently high levels, and improving the business environment, in particular for Small to Medium Enterprises (SMEs), and the balance-of-payments.
“Several members called on Zimbabwe to reduce state ownership, improve the governance of state-owned enterprises, and to further tackle corruption,” Aspelund said.
