Sunday, May 31, 2009

SA's 10th province Zimbabwe to adopt the Rand

What could possibly go wrong? All we need really for this plan to work is for Mad Bob to concede power to Tsvangirai or to the South African government fully, fire the fool Gono who's in control of the treasury, responsible for the Zim dollar's demise and for stealing money from private and public bank accounts, get the Zanu-PF thugs including the army and police hierarchy and war vets to relinquish their stolen farms (the economy needs to run on something) and for everyone to finally appreciate the constitution, recognise the rule of law and so forth. This is only the first part. 'Tis easy. Stop chuckling.

Right then, hell having frozen over, the South African guvmunt then needs to shore up the Zim economy which means us paying for their civil servants, army, police, etc however long it takes, probably years - including settling Zim's debts (do I hear you say "pay our doctors first dammit!?" and "what about OUR recession?"). What's that? Can't hear you.. Yes, the ANC's quiet diplomacy has come home to roost with a hefty price tag to you and I but the 'experts' say, never fear. You know what they say about experts...

Related:
Zim unity govt beginning to unravel?


Nothing to fear in plan, say SA economists

Zimbabwe could start using the rand as its currency this year. The country’s finance minister, Tendai Biti, said his ministry was exploring three options and a “decision would be made by the end of the year”.

“One of the options is to join the rand monetary union. We will also consider continuing with the [current] regime of multiple currencies or bring back the Zimbabwean dollar and redenominate it either with the rand or the US dollar,” he said.

Economist Dawie Roodt said South Africans should not be concerned if Zimbabwe adopted the rand.

“I’m very much in favour of such a move. People assume that the rand could go the same way as the Zimbabwean dollar, but that simply won’t be the case.”

Biti’s comments come after ex-President Kgalema Motlanthe suggested in February that it would be a “practical” move for Zimbabwe as part of their economic recovery plan under its coalition government.

The idea was hailed at the time by economists. However, such a move would take away Zimbabwe’s powers over its monetary policies. It also means Zimbabwe’s interest rates and inflation levels will be the same as South Africa’s.

Biti said: “Any such decision depends on the performance of the economy — that would be the ultimate deciding issue.”

He said there were signs of “stability” with the country expecting a growth rate for the year of 6 percent. Zimbabwe recorded a -1.1 percent inflation rate in April.

Just last month Biti announced that Zimbabwe would be receiving 400-million in credit lines from several African countries.

Chris Hart, an economist at Investment Solutions, said adopting the rand was “an important step in terms of Zimbabwe’s recovery”.

“It effectively imposes a fiscal and monetary discipline with the Zimbabwean economy functioning on a basis where it does business that is more competitive on an international basis.”

He said it could be “painful initially because, among other things, our interest rates will be linked to theirs and they will have to cut back expenditure”.

However, it would “put their economy on a stronger footing” in the long term.
Roodt said the only downside would be that, in the short term, South Africa would probably have to lend Zimbabwe rands to kick-start any switch-over.

“We can either provide them a loan or they can earn it. The latter is probably best as then we don’t have to run any major risk.”

Last week the African Development Bank announced a short-term emergency recovery programme in Zimbabwe. The bank called for greater “foreign assistance” and an injection of private capital to resuscitate the economy.

Announcing the strategy that would cover the next 19 months to December 2010, the bank said it had “eliminated the quasi-fiscal activities of the Reserve Bank of Zimbabwe and introduced cash budgeting, spending only what it receives in revenue”.

3 Opinion(s):

Vanilla Ice said...

Great idea. Only problem is, Zimbabwe is bankrupt. It will not have enough tax revenue to cover budgetary expenses, and will not be able to turn on the money printing press.

Viking said...

It's hard to see which way this would go. Would there be enough Rands to go round? would the Zim noneconomy drag down the Rand, or increase it's value? It should only be temporary anyway.

Anonymous said...

They would need a bloody massive loan to make it tick over! I wonder if this was the plan all along? Ruin the economy so that Southern Africa becomes like the EU?