ZwNews Chief Correspondent
Responding to questions in parliament recently, Zimbabwe’s Minister of Finance and Economic Development Mthuli Ncube, has admitted to the weakening surrogate currency, bond note against the United State of America’s dollar.
Some Members of Parliament (MPs) questioned the minister of the three tier pricing being used in the market, describing Ncube’s budget as unreal and fake. The MPs added that the companies which did not use the three tier system, have resorted to pegging their prices in bond notes, but at a higher level in line with the equivalent rate at which the green buck is trading on the streets.
They gave example of an item selling at US$10, can be pegged at $30 bond note in the event that the rate out there is at 1:3. The MPs added that such distortions is clear indication that the two currencies are not equal.
In response, Ncube seemed to contradict himself by claiming that the one is to one rate, between the bond note and the American dollar was correct, while at the same time saying inflation was eroding the local surrogate currency of its purchasing power.
Ncube called the price distortions premiums.
He said the one to one was the official position, but not in reality on the ground as people were using premiums, and that the government was aware of various premiums being applied by individuals in terms of the rate at which people are trading.
“It is important to maintain the parity while we are aware that there are premiums being used all over the place,” he said.
Norton MP Temba Mliswa mockingly chided the minister; “You are confirming there is a parallel market, and yet you are telling us the American dollar and the bond note are the same.”
In response, Ncube said; “I indicated that there is premium to our fixed rate of one to one. Naturally, this premium does cause inflation.”
Further admitting the two have different value.
Despite the confession, the government is still divorced from reality, still claiming the one to one still stands. Various economic commentators have been warning of the distortions caused by the unrealistic position that the bond note and the American dollar are equal. However, the government chose to remain in denial mode, despite all the evidence pointing otherwise.