Natasha Chamba, Business Reporter
PROMINENT economist and former Government advisor, Professor Ashok Chakravarti, says efforts should now be redirected at stabilising the exchange rate to protect the value of the Zimbabwean dollar and stimulate production.
The adoption of a mono-currency system following the scrapping of the 10-year long multi-currency regime on Monday, has been at the core of Government’s comprehensive economic reform agenda, he said.
Speaking to ZTN, the Zimpapers-run television channel on Tuesday, Prof Chakravarti said the return of the Zim-dollar was a calculated move informed by round table engagements by economists who advised that the multi-currency era was temporary, and should lead to the adoption of a local currency.
As such, he said, measures being put in place by Government were in the direction.
“We have been having dialogue for the past six to eight months. It started last year with S.I. 33, which talked about the removal of the 1:1 (exchange rate) with the RTGS, thus, creating a major source of corruption.
“Then the interbank market was formed in February. So this is a continuation of that. Perhaps it’s seen as a shock but for us economists it’s not a shock at all,” he said.
“We still have a long way to go. The objective is to stabilise the exchange rate so that inflation is stopped, goods and services are available and foreign currency is available.”
Professor Chakravarti said measures being put in place were in the right direction.
He also explained that economists were agreed that the multi-currency regime should come to an end and had been lobbying for reforms.
Prof Chakravarti said it was only when Professor Mthuli Ncube was appointed the Minister of Finance and Economic Development that constructive reforms began to be undertaken.
“A fiscal deficit is a poison to any economy and was poisoning our economy and it had to stop. We lobbied for reforms and talked about it. Once the new finance minister was appointed we did not have to talk about it anymore since he was on board and we spoke with one voice,” he said.
Prof Chakravarti commended Prof Ncube for clamping down on the fiscal deficit through controlling public expenditure, taming money supply and increasing revenue collection on the other hand.
He said the prevailing inflation could not be compared to the 2008 experience where there was excessive printing of money, which led to the demise of the local currency at that time.