Carte Blanche with Perry

Zimbabwean dollar bond notes © Getty Mthuli Ncube, Zimbabwe`s minister of finance wrote an interesting op-ed in the Financial Times  defending the re-introduction of a local currency. His argument is primarily premised on the theory that a weaker local currency will boost exports.  This is a brief response challenging that very argument that Zimbabwe needs its own currency which will be weaker than the USD, to boost its export competitiveness. The aim is to stimulate debate on the national policy front, by presenting an alternative view. A few thoughts on this: Mr Ncube`s theory is classic textbook economics, which essentially asserts the view that the benefits of a weaker local currency will outweigh the negatives of a weaker currency to a foreign currency. But is the case? A weak currency acts as a direct subsidy for exports while acting as a punitive tax on imports. But in Zimbabwe`s case, perhaps the first departure point is determining a suitab...

For much of 2019, Zimbabwe`s economy has oscillated between confusion and chaos, and as the second half of the year wears on, the headwinds show no immediate sign of relenting. In fact one might even argue that there is a distinct success about the failure of the current administration in delivering on its promises. This in spite of government`s own constant and consistent barrage of positive narratives attempting to placate the nation. And for the most part, the country has been in need of placating, reeling under the weight of the “big-bang” shock therapy being administered under government`s Transitional Stabilisation Program, adopted in October 2018. For the ardent observers, current events are reminiscent of the recurring themes during the hair-raising hyperinflation era. Winding fuel queues, electricity shortages, incessant talk of “unscrupulous and profiteering” retailers, and the threats to faceless “economic saboteurs”, all bring flashes of the tumultuous ‘lost decade”...