Between 2010 and 2015, Zimbabwe economic growth averaged no more than 5% per year. That’s significantly far less than the growth in multiples of salaries of politicians and civil servants.
Apply the same math to the private sector and you get a terrible picture. Since Zimbabwe only earns United States dollars from exporting goods and services as well as foreign direct investment and other minor inflows, apply the same math to the growth in earnings by locals vis-à-vis growth in exports and you discover a shockingly gloomy picture.
During the government of national unity, Tendai Biti used to rein in expenditure and take a more austere approach to balance the budget. This restricted the local creation of money – keeping it in close tandem with exports. Still the country had a negative balance of trade and a current account deficit, but it was manageable.
Once ZANU PF took sole control of government all gates were opened.
The government went on an expenditure spree, buying luxury cars, flying to every meeting they could and awarding salary increases among other things.
They think money grows on trees. Even though Chinamasa was faced with the reality given that numbers don’t lie, President Mugabe kept telling him to find the money.
For example, flanked by Jonathan Moyo and George Charamba at a press conference on 13 April 2015 at Munhumutapa Building, Chinamasa announced that the government was suspending the payment of bonuses.
This of course was informed by the reality of the situation.
A few days later, Mugabe publicly trashed Chinamasa at an Independence Day celebration. Naive civil servants celebrated Mugabe’s move, but they didn’t realise that such a move would invite the current problems.
Rampant spending of money took place in 2014. From that time, Chinamasa started running large budget deficits.
Government was funding the reckless spending by creating money.
How did they do so?
They created IOUs, borrowing extensively in the local market through instruments like treasury bills, assuming old debts such as the $1 billion RBZ debt, and downright creation of digital balances wired via the RTGS system.
Continued next page
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