Zimbabwe is on the verge of another economic cramp that is bound to be far worse than what it has been suffering for the last decade.
Already, the nation has been on an indefinite national lock down for the third month running, and now, the pandemic is really taking a dire toll on the economy. Well, it is not the Coronavirus effect that is bound to doom Zimbabwe into an economic crunch (yet again). Rather, it is the country’s tendency to simply print money whenever it deems fit; if only life were so easy!
Zimbabwe, like all other countries, is looking to cushion its business sector from the coronavirus crunch. However, the way Zimbabwe is looking to fund its proposed US$ 998.34 million (ZW$18 Billion) stimulus package is if anything, questionable, if not downright inadvisable, or to be blunt, shall we just go ahead and call it, rudimentary?
Well, how else would you describe a plan that involves printing money that is not backed with any value; I mean, what is the worth of that money? The plan defies the very definition of money; anything with value and generally accepted as a means of exchange.
Already the Zimbabwean dollar is suffering huge inflation that currently hovers at more than 670% and is expected to soar to over 1000% by the end of the year!
Zimbabwe is not new to this inflationary self-inflicted curse. In fact it seems to be the country’s fated ‘drug’ of choice, the most recent dose being in 2008 when the government minted out money that barely had the value of the paper it was printed on. The country suffered ‘outstanding’ hyperinflation that rendered the Zim-dollar useless and the country was forced to starlike t using other currencies.
Now, it is feared that the country may take the same fateful course of action, mint millions of the Zim-dollar to use as a stimulus package, a move that would plummet it only deeper into the economic abyss it is already at risk of falling into.
I stand corrected but I believe it was Albert Einstein who said: Insanity is doing the same thing and expecting different results.
Dodging the bullet: Ministry raises red flag
In an attempt to save the country from itself, Zimbabwe’s Ministry of Industry and Commerce, warned its government that “…funding the rescue package through printing of money will be more harmful to the economy than the impact of Covid-19.”
“It is our belief that the funds will be easily accessible with no need to resort to printing since the negative impact of printing money can be worse than the effect of Covid-19,” the ZNCC said in its submission.
What the ministry was referring to by “the funds will be easily accessible” is probably the US$14 million available to it from the African Development Bank’s deep pocketed fund along with more funding due from the Afreximbank.