Friday, February 27, 2009

Latest RBZ directive

The Reserve Bank has not quite broken its habit of trying to regulate and control everything we do. Despite some surprising and pleasing developments in respect of foreign exchange controls and the procedures for capturing real values when selling export commodities, our day-to-day activities will still have us submitting to RBZ requirements fairly regularly.

I have attached the latest set of Reserve Bank Directives (please e-mail me if you want a copy)in the hope that they will not generate too much despair. Some facets of the requirements suggest that RBZ is trying hard to avoid becoming redundant, demanding that we all accept 5% or 7,5% of the proceeds of our activities in Zimbabwe dollars that we do not want, cannot spend and cannot find anyone else who will be happy to take them. So the removal of that amount from our incomes behaves like a tax, but RBZ is not empowered to collect taxes from us, so it has to go through the pretence that it is buying the money, not simply taking it.

Our reaction to this should not be allowed to strengthen RBZ's belief in its omnipotence. My own feeling is that Zimbabwe will be able to progress much faster if the Zimbabwe dollar is abandoned completely and declared dead. To achieve this in one step, any money borrowed by Zimbabwe from abroad should be enough to be sold to the banks for their total Zimbabwe dollar balances, completely replacing these balances with hard currency at one exchange rate that applies across the country for the moment needed for the transaction, after which the Zimbabwe dollar would never be mentioned again.

Thereafter we will all have US dollars or rand in our bank accounts and we will be able to start functioning again with the benefit of all the help we need from our banks, all of which will also be able to start functioning again. After that, if we need more hard currency to achieve our goals, we will have to earn it, or borrow it, or attract it as equity from investors.

While moving in that direction we would, of course, have to display the levels of discipline needed to convince the lenders they were not throwing their money away and we would have to be as imaginative as possible about rebuilding our productive capacity and our export revenues.
Big challenges, but not beyond us. What will prove beyond us is any hope of success in attempts to breathe life back into the Zimbabwe dollar.

I hope you are impressed by this latest RBZ effort to make things look normal!
Kindest regards,

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