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Government losing confidence in their own currency

As President Robert Mugabe’s government is threatening to prosecute businesses rejecting payments in bond notes, reports have emerged that the immigration department is doing the same. Some Zimbabweans say the bond notes are a ticking time bomb that will take them back to 2008 when supermarket shelves went empty.

The Government needs to create an environment where the business community and the people have confidence in the stability and credibility of the monetary system.  Nothing in the last few months has helped create that confidence.

Markets are usually self correcting and with minimal government interference will produce positive results.  Everyone envies the US economy but in order to get to that level of market confidence, the government has to create fiscal discipline and drastically reduce the size of the civil service including the military.  They have to reinvest in infrastructure to create the kinds of jobs that create ancillary jobs.  If you create jobs in road construction, there will be need to feed and house the workers which will create additional jobs.

There will be a lot of short term pain in the transition to a market based economy but there is no other viable option left to the country.

 

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