Expert warns Zimbabwe’s fiscal indiscipline threatens fragile economy

Ritesh Anand, a global fund manager and entrepreneur, has sounded the alarm on Zimbabwe’s fiscal management, citing a lack of discipline as a major obstacle to economic stability.

He cited the interconnectedness of monetary and fiscal policies, stressing that restoring credibility and trust in the central bank is crucial.

Anand expressed skepticism about the Zimbabwean gold-backed currency Zimbabwe Gold (ZWG), citing the central bank’s lack of credibility and public trust.

“The two go hand in hand. Monetary policy goes with fiscal policy. Zimbabwe lacks fiscal discipline,” Anand said during an interview with Alpha Media Holdings publisher Trevor Ncube.

“We spent more than we earn and we fund that earning by printing. The printing ultimately erodes the value of the currency.

“No country in the history of giving up their currency that adopted the US dollar has ever gone back to using their own currency. We have tried it twice, and it doesn’t work.

Related Articles

Zimbabwe’s economy on the brink of collapse amid…

Sep 26, 2024 31,964

Zimbabwe’s economic growth slows down as spending…

Jul 25, 2024 23,130

Zimbabwe struggles to explain US$2.7B debt discrepancy amid…

Jun 20, 2024 42,520

18 years on: Pensioners in Zimbabwe left in poverty after…

Jun 13, 2024 32,482 Prev Next 1 of 35

“The ZWG is unlikely to work because we may have the gold reserves, but what the central bank lacks is credibility.”

To revive the economy, Anand advocates for restoring independence and credibility in the central bank, earning the public’s trust in the national currency.

“People don’t trust the currency. So, first and foremost, restore credibility and independence in the central bank. Restore trust. People need to trust the currency that they hold,” he said.

“Introduced in April this year, the ZWG has plummeted in value by over 40%. Despite being backed by gold and foreign currency reserves, the local currency continues to lose value.

In a significant move two weeks ago, the Treasury devalued the ZWG by 43%, setting an official exchange rate of ZWG 25: US$1. However, the currency’s value has continued to deteriorate on the black market, where it is now trading at an alarming rate of over ZWG 45: US$1.

American economist Steve Hanke this week stated that the ZWG has depreciated by 67%.

“Since its adoption on April 8, 2024, the ZiG has depreciated by a STAGGERING 67% against the USD. ZIM LEADERSHIP = ARROGANT, CORRUPT, and INCOMPETENT,” he said.