News24
14 Dec 2019, 11:43 GMT+10
At the heart of Zimbabwe's economic paralysis is a personality clash.
Finance Minister Mthuli Ncube and Reserve Bank of Zimbabwe Governor John Mangudya don't get on, are pursuing different agendas and at times issue directives without informing each other, two people with direct knowledge of the situation said.
The result: policies that are quickly reversed, confusing contradictions in public statements, an economy that's forecast by the government to contract 6.5% this year and an annual inflation rate that reached 440% in October.
While Ncube, a Cambridge-trained economist, is often accused of being overly optimistic, his push to cut spending and bring order to chaotic government finances has been lauded. By comparison, Mangudya, an appointee of former President Robert Mugabe, is seen as a governor who puts political considerations ahead of rational economic decisions.
"They seem to be at two polar opposites," said Jee-A van der Linde, an economic analyst at NKC African Economics in Paarl, South Africa.
The governor has bristled at the minister taking decisions he feels are within the central bank's domain since a fallout earlier this year, the people said.
The Zimbabwe Independent on Feb. 15 reported on an alleged row between the two men over how to handle the nation's monetary policy, citing people it didn't identify. The Harare-based newspaper said Mangudya threw paper files at Ncube before he walked out of a meeting. It later retracted the report, saying it was based on "wrong and unverified information."
It's official: Hyperinflation has returned to Zimbabwe
Ncube's focus on austerity and orthodox economics has been seen by Mangudya as unwise in a country with Zimbabwe's unstable politics, the other person said.
"Ncube seems out of his depth in the current cash-shortage crisis," said Besseling. "He lacks the political clout to implement real structural change in the distressed economy."
Mangudya didn't respond to calls made to his mobile phone seeking comment. The Treasury didn't immediately respond to a request for comment.
For now, the economy is in dire straits. There isn't enough money to pay for adequate fuel and food imports, and the currency is trading at 16.54 to the greenback after a 1:1 peg was removed in February.
Monetary policy is erratic. Last month, the central bank halved the benchmark interest rate to 35%. In September, it had been raised by 20 percentage points to 70%.
"Monetary policy is an absolute shambles," Van der Linde said.
Get a daily dose of Europe Sun news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Europe Sun.
More InformationMADRID, Spain: Liverpool footballer Diogo Jota and his younger brother, André Silva, have died in a car accident in Spain. Spanish...
LONDON, U.K.: An unrelenting heatwave sweeping across Europe has pushed early summer temperatures to historic highs, triggering deadly...
President Donald Trump's plans to build a space-based Golden Dome missile defense shield have drawn immediate criticism from China,...
NEW YORK CITY, New York: Paramount has agreed to pay US$16 million to settle a lawsuit brought by U.S. President Donald Trump over...
LONDON, U.K.: British Prime Minister Keir Starmer won a vote in Parliament this week to move ahead with changes to the country's welfare...
WASHINGTON, D.C.: President Donald Trump will meet Israeli Prime Minister Benjamin Netanyahu at the White House on Monday. President...
FRANKLIN, Tennessee: Hundreds of thousands of Nissan and Infiniti vehicles are being recalled across the United States due to a potential...
REDMOND, Washington: Microsoft is the latest tech giant to announce significant job cuts, as the financial strain of building next-generation...
LONDON UK - U.S. stock markets were closed on Friday for Independence Day. Global Forex Markets Wrap Up Friday with Greeback Comeback...
SANTA CLARA, California: Nvidia came within a whisker of making financial history on July 3, briefly surpassing Apple's all-time market...
SACRAMENTO, California: California's multibillion-dollar farms are facing a growing crisis—not from drought or pests, but from a sudden...
WASHINGTON, D.C.: President Donald Trump says the United States could soon reach a trade deal with India. He believes this deal would...