The terrible price Zimbabweans are paying for government’s extravagance


I was really quite shocked when the President spoke to this House and he did not mention this fact at all. It was not raised as an issue. He dealt with the question of our legislative programme purely and simply. To me, what he said was completely irrelevant because the real facts are that if you get your salary today, that salary is worth 30% less than what it was worth at the beginning of the year. By Christmas our salary will be worth half what it is worth at the beginning of the year. We are devaluing by stealth.  Every civil servant in the country and every person who works on a fixed salary is going to feel the pain by the end of the year because you cannot print money on this scale and imagine that you are going to get away with it. You are not going to. The consequences are going to be exactly the same as 2008. It is going to be rampant hyper inflation which is going to destroy savings, industries, people’s living standards and it is going to destroy the productive sector in Zimbabwe.

 When a formal gold miner, not an informal gold miner because the bulk of informal gold is sold on the black market and they get paid in cash by the smugglers.  If I am a formal gold producer and I have sold my gold to the Reserve Bank, I get paid today 50% in real money and 50% in bond notes.  If I am a big producer and I give my gold to the Central Bank and I get paid in RTGS dollars. What can I do with those RTGS dollars? I cannot buy anything externally. Their value is depreciating every day.    I want to forecast now as we talk today that within a matter of months, the great majority of formal gold producers in this country will be bankrupt because, you cannot do that and  imagine that there will be no correspondences.

I understand that fully when the Governor of the Reserve Bank demanded that Zimplats release 80% of their foreign earnings to the Central Bank for allocation to other people, they refused to do so. They argued they have an agreement with the Government which allows them to retain their foreign exchange in the form in which we receive it and we can use it in that form. If we want to sell foreign exchange, we will sell it at the market rate. If the Reserve Bank takes 80% of the revenue of Zimplats and converts it into RTGS dollars, the way we were doing it back in 2008, Zimplats would be bankrupt tomorrow because they could not pay their bills and staff. For me, if I was President of Zimbabwe, that is the key issue I would address.

We have been conducting public hearings for the last three days under the Budget and Finance Committee. Yesterday, we were in Chikomba and the Chief of the district was there with us. He spoke at the end of the meeting very passionately and asked where the burial place of the Zimbabwe dollar is. Why has it died? He does not understand what happened but he does know that we killed it and we did kill it. Along with its killings, when independence came in Zimbabwe, Madam Speaker, the Z$ was worth two United States Dollars (US$2.00).  When I first started work in 1957 on a ranch in Matabeleland, the Rhodesian Dollar was worth two pounds.

Madam Speaker, running a currency properly and behaving correctly in terms of the principles is a straightforward thing to do, and if you violet those principles, you pay the price.  The price we have paid has been an enormous one – we have destroyed the accumulated savings of the country.  I worked for 50 years and for 20 of those years I worked as a Chief Executive of major companies.  I paid all those years into a pension fund.  I paid 20% of my salary into a pension fund, by law.  I paid more than US$1 500 000.00 into a pension fund, but because of inflation my pension today is $94.00 a month.  Madam Speaker, that is a terrible price to pay, and all of us have paid it.

For me, the great tragedy of the President’s Speech is he did not raise this key issue at all – he never discussed it.  I was astonished in the last three days in our public hearings at the extent of the anger amongst people at what is happening.  I think, we as a Parliament have to face reality and we have to call a halt to this reckless expenditure on our behalf.  I thank you.


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The Insider

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.


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