Not long after the Monetary Authorities in the person of John Mangudya, the RBZ governor, announced that the central bank would be introducing a new currency in two weeks, his Fiscal counterpart, moved in swiftly to contradict that.
We had understood from the RBZ’s off the cuff remarks that the new currency, would simply be at par with the bond notes. However, these notes/coins would be the proper Zimbabwean currency not the misnamed bond notes and coins we continue to use.
Mthuli Ncube adds more confusion
Questions come to mind after listening to this rambling. Does this cash injection involve the printing of more bond notes? Who came up with the rather unconvincing idea that sticking to small notes is not going to fuel inflation?
Why does the Finance Minister think injecting more cash into the economy will result in prices coming down? It’s not even logical from where I stand. A cash injection is simply going to mean more cash in the economy, eliminating the cash premium that currency exists. It seems we agree on that.
However, logic dictates that the prices of goods will rise as cash becomes less special and more plentiful.
A penchant for ambushes
For some demented reason those tasked with economic policy have an unhealthy love for ambushes. The Finance Minister rather than being forthcoming and transparent is being coy and holding the cards to his chest. He doesn’t even want to reveal the denominations that are going to be introduced only that they are small.
If I was a business and based on experience I would expect that currency to come tomorrow and plan accordingly. You never know with these guys.