Mthuli Ncube Grilled on The Disastrous Forex Rates - Senate Question and Answer Session

Mthuli Ncube Grilled on The Disastrous Forex Rates - Senate Question and Answer Session

Show Video

the the players in the parallel market are numerous it's not just the the ordinary citizens uh the street corners it is also the corporates it is also the banks i think we know what money changers do they change money so their business is clear but illegal at the same time now for corporates some of the corporates what they're doing is basically going into the banking sector to borrow cheaply because of negative real interest rates and then using those resources to then acquire inventory to store the inventory or to put it on the shelves at higher exchange rate every time they do that and then they the whole cycle starts all over again so if a situation where even corporates were pushing up the power right and then there is announced by some faceless people so there's a new power rate i don't know where it's coming from uh so there's that element but also some of the banks were doing exactly that on their own account using their own resources also taking positions in in the market so there are numerous players all trying to take advantage and trying to make easy money which then makes the the exchange rate unstable and creates a power rate whose level is very different from our official auction rate or indeed the willing buyer winning seller rate so what actions have we taken what actions do we continue to take let me be clear we are using both the zimbabwe dollar and the us dollar in the main it's not one or the other and there's a reason we're doing that a very good reason the good reason is that we have sanctions on us we have challenges with credit lines so if you have no credit lines you have to be creative so what we've done is by introducing the auction this is a surrogate credit line access mechanism where we are accessing the u.s dollars that already here through the 20 surrender option channel rather as well as the the export retention scheme that is in place for exporters as well as whatever government through treasury sells onto the auction to pay civil servants and other sim dollar liabilities so we need both currencies i need to be clear about that on the on the onset now so we will recognize that but again i also hear arguments about u.s dollarization or singularization please i ask the public to desist from that argument it's not a useful argument we need both currencies if you go the route of zoom dollar alone for now uh uh is too early to do that also what you did mean it would mean that will not allow you to hold u.s dollars like in any other country where you can't use u.s dollars

to shop we also want to allow the banks to keep foreign currency the country they have one and a half billion u.s dollars in the banking center we can't allow that ego because a monocurrency regime of that nature does not permit that now further companies would have to restate their balance sheets in a manner that happened in 2008-09 so it's a very dangerous so please understand we need both currencies we need the current system but we need stability so what are we doing to deal with stability it starts with the key fundamentals of a stable currency that we don't want huge budget deficits so as i speak modern president in the last four years we have not been running large budget deficits in some years like for instance in 2020 we even rent a surplus in 2021 however we have a deficit very small within the one and a half percent a a deficit target and certainly within the three percent target that static has mandated that all countries should really run their economies appropriate that's where he starts fiscal discipline then we have monetary policy discipline as well as his excellency announced the previous week that the the target for m0 which we all worked with him on that should be zero percent growth zero percent growth in deserve money growth for the rest of the year it's very very important that we keep tight money carry policy tied fiscal policy and and those are coordinated also it's important that we continue to support our exports which we're doing through various incentives our remittances are coming in so current account is strong it is positivity strong so those fundamentals are the first order of business so then i now turn to the behavioral the behavioral starts with the behavior of our financial institutions in terms of disintermediation of liquidity or monetary policy you know enactments where now uh banks working with some corporates some individuals you find that rather than channeling liquidity into the real sector which is called the monetary transmission mechanism the liquidity defines this way onto the parallel market or the stock market so you've now got a speculative bubble so we had to clip that through the suspension of landing that we put in place it was a big hammer but it a big hammer was needed but the hammer has been lifted in halfway of course yesterday to make sure that those who were in the wrong are dealt with so the investigations continue but lending his resume but we had to do that and the impact of that uh the president never the honorable senator um is that this has halted the power market somewhat we've seen that we're pleased through that but also the action that we also took which is also a behavioral issue on this is on the stock market where we've tightened regulation you see what was happening in the stock market is very similar to what was happening with eco cash where you've got a stock broker with what you call a trust account which sits with the bank i don't mention the bank a bank then below the trust account we have a series of accounts maybe a professor but you can't see those accounts so whenever shares are being bought or sold between myself and honorable to come busy money just moves below this but you don't see the movement in the official account so things were happening here but also i could say uh is also is an account there so basically you managed to move from one account to his account or back which are called third party accounts so that created a loophole for trading in the parallel market but at the same time creating an acid bubble in the stock market so that is very very unhealthy we had to prick that bubble and it was sufficiently pricked as of now we did more in terms of dealing with behavior of course while we have a dual currency we we feel that we still need to strengthen the demand for domestic currency after all so the mtt tax was increased for us dollar transactions because again we're signaling that we prefer our own a currency um i could go on and outline all the measures that we've been taking we've done a lot uh for what is worth i'll be very happy uh madam president to circulate uh to members through your office the measures we've taken one by one uh it's a lot that we've done to try to stabilize our currency but also we are quickly aware of the transport losses whereas i'm digressing he didn't ask me about transport his excellency also opened up the market for other players to come in all designed to create competition and make transportation and the cost of transportation to be to be affordable so so modern president we've done a lot to stabilize our currency now let me explain the exim then that we took at the beginning of the week regarding opening up borders to basic goods two things were hard happening to you madam president one with a global situation where we have imported inflation you see infection has been rising globally since the last quarter of 2021 it's been rising due to the perceived success of the global vaccination program and the opening up of global values flesh has been going up so has been the oil price that's that's where it started so by the time we go to the conflict that you see now happening in the eastern part of the of europe not only accelerated what had already started so now you have inflation being pushed through economy through the fuel channel you see what happened to the fuel that's one channel it's also coming through through other goods and raw materials that were importing which is the global value chain it's also coming through the the fertilizer market channel it's coming through the wheat the cooking oil channel so you've got that happening and that's something we should be wary of that globally we may be hating heading into a very tight food security challenge in the rest of the year and this is for the whole world not just for the whole world secondly madam president locally we are seeing a spike in prices for no reason really for no other than profiteering for all this reason really so we have to act to try to make sure basic commodities for the global reasons for local reasons so those commodities are available to citizens at an affordable price so we opened up the borders for basic goods and i think that's a good thing that the government is taking a good step to really look after our citizens and to ensure for the believing availability of of these of these goods industry is still getting a lot of incentives hey madam president through the various tax rebate schemes that i always bring before this house every time we approve the budget there is another rebate on this another rebate on that so they are getting those benefits as well as rebates for retooling they should be retooled by now we can't keep it retooling forever this is the free tool so if the retool it means that the cost of production is going it's gone it's improved productivity also should have improved so really industry has been protected but now it's time to protect the citizens to support the citizens so that's what we've been doing in terms of the mix of policies as i say policies of winners and losers in our own assessment these uh bouquet of policies actually seem to indicate that there are more winners than losers that's what you want in any policy mix i'd like to stop here madam president thank you honorable minister supplementary question honorable who can busy all this vocabulary our own your mic is awful oh sorry thank you our zip dollar the nose brand new notes they've flooded the streets and i i presume madame president they're coming from our banks and those banks fall under the under the the the command of the minister of finance where is that money coming from is it not controlled since last year we've been talking about the exchange rate on the black market it's not starting despite the loan arrangement that you've done is even moving much faster now all the membranes have been reduced to purpose because of that what is the ministry doing to at least assist the ordinary citizens honorable minister you can avoid the salary increments for example in order teacher rtgs divide that by 400 on the black market because when the chair goes to the bank you cannot access the u.s dollar he has to go to the street in the end the people don't think the government is not doing much that's what means i was really expecting to carry on all afternoon so i'm very happy to carry on he accomplishes highlighted three areas i tried to decipher what he was talking about the first four only civil servants what he he said is not correct i have to disagree with him i will explain he said that the teacher has no access to u.s dollars that is not correct

the teacher has access to 175 us dollars had currents that is exactly what we've done in terms of civil servant salaries with the 75 us dollars which we linked to covet in the 100 us dollars which was added at the beginning of the year so 175 years ago so it is not correct to say that the teacher has no access to u.s dollars that's the first point the second point is is really i'm trying to take what was saying that what are we doing about the person around the corner a number of animators who are ripping our people off throughout that title right so we have the financial intelligence unit that has got teeth it has been going after and by values with their companies they're individuals even when you've got the best policeman in the world so you see the it's a continuous project trying to catch criminals when they think of opportunities who have been chasing these people and they know they're being chased that's why they run around whenever they see us but in our own assessment modern president as i say i think that the person in the street or corner now has become less important the real culprits are now the big players which players we then dealt with by temporary suspending lending that's what is going on the corporates who are pushing up the rates through the goods that are sold on the shops so so surely when we deal with crisis uh that is assisting the common person when we open up borders and say 10 guys i see you know that foreign he's not doing anything no it cannot be the case we can disagree on the decrees of effectiveness with the policies but clearly we are taking action but the president has thank thank you so much honorable president and i want to raise my question to the minister sorry my acceptance for finance my question is simply direct to you are we not in the same situation we were in 2007 to 2008 in which our zim dweller was so pathetic and failed to sustain our lives as we stand right now honorable minister the public's in civil servants it has been said that the previous speaker are earning nothing you disputed that 80 dollars you added 175 it then came to 255 still is not a reasonable salary for any person to live are you in control of the government or have lost it to the cabals thank you so much thank you madam president i thank you for those follow-up questions still on the economy um are we in 2072-89 we are not in two seven two eight first of all we did not have a balanced fiscal position we did not have tight monetary policy we did not have the sort of fundamentals that you see now secondly we also did not have the official uh dual currency that was put in place which has allowed citizens corporate and other agents to to utilize these currencies as they as they desire we are not coming to salaries there's also a fallacy but i'm president that the salary back in october to eight for civil servants was it he keep hearing figure 540 your thoughts per person that is not correct because back then the defective salary was affected in fact half of that because actually half which was about 275 u.s dollars and i can prove it yeah it was actually half so so the demands for that kind of 540 is is is completely misleading so the question is the the kind of package that we put in place for civil servants and we'll continue to do more at the president you know are we not doing a lot to read this government i think we are and i said we're doing a lot for the teachers we've made a commitment to build institutional accommodation and we're doing that importation of vehicle duty-free supporting teachers in terms of school fees up to three children in a government school of course state home school nurses with similar slew of benefits as well non-monetary benefits surely we really applied our minds and done a lot to support our hard-working citizens and they are hard working because i work with them so so so but also i just wanted to debunk the thinking that certainly we haven't reached the kind of october to eight levels of our salary because even that figure it was actually fallacious is not correct i think you might impress it thank you honorable engineer missouri thank you honorable president um honorable minister you have been talking in all our budget sessions that there are about 10 people who are crooked in terms of this economy they've also talked today that the corporates are in charge of the runaway inflation or the runaway currency what is we have not seen any of these people being arrested and there is strong strong mistrust between your ministry and the public in that they believe that the whole machinery and corruption is within the in in exchange rate within the reserve bank itself i don't know how you can do that to the public to say why don't you arrest those people because we can't continue to be told there are crooks there are things we want to know if you know they are there they are 10 or 50 none of them has been arrested can we have them arrested those thieves thank you madam president i think sometimes for those who have questions again yes we we we now know these uh crooked individuals some of them have already been arrested some of them have been fined but i think that the the honeypot of the of doing the illegal activities is so rich that some of them keep coming back in one from one another those are the facts so you have to keep arresting them and rearresting them finding them and refining them that's what we've been doing so that we're not doing anything we are suddenly doing something and and dealing dealing with them as i said we are still going through this transition of both currencies and we need to we believe with some of these ugly facts but we are dealing with these culprits and the individuals and we were finding all the distress between the public and the ministry no there is a very good trust between the public and the ministry certainly when i go around the country i engage very well with citizens i have no problems engaging with any citizens students appreciate a lot of things that the government is doing and i can i have a long list i have a long list of things whether it's the quality of the roads the quality of the of the dams what we've done through the food that it was a program to empower our citizens all that is taxpayers money coming through treasury coming through the government and certainly i don't get the sense that there is a distrust there's a lot of trust what the public doesn't trust is about diets that's what they don't trust that's what that's the truth so so really the the the commitment from government is there to make sure that we bring to book anyone who is a mild country decides these challenges is concerned but there always be challenges i said the honeypot is too attractive for most people to to leave behind and begin to do the right thing i thank you thank you no more supplementary questions uh we proceed but if i may let you know that in the house we have honorary broadcaster because minister of home affairs honorable madeira deputy minister of transport honorable evelyn minister of primary and secondary education welcome ministers i recognize the honourable senator madam president and no tender madam president senator chief [Music] my questions anyway thank you thank you i recognize honorable senator malek can we hear those before we come to you madam president can you please put your mic on it's on it's on yes madame president a are there any minerals that we are perhaps targeting that can support our currency it's a very good question currently we have some structures where we are able to access credit lines from abroad from certain banks using our gold minerals so the gold minerals are supporting something is going on so the gold minerals are supporting access to those credit lines that we can borrow and and support projects we've also uh have some credit lines or borrow or loans that are supported by platinum we also have that so those are the two minerals that we've used to support our credit lines and platinum in terms of gold reserves that stand behind the the zimbabwe dollar we don't at the moment use gold reserves or platinum reserves we use these minerals to support the access to the the loans in the first place however over time we'll build gold reserves because what we're noticing is that to build these gold platinum reserves which are in fact quote unquote hard currency or u.s dollar assets you have to buy them with u.s dollars in the first place so if if the gold needs to come into the hands of government because it is in private hands-on for it to come into the hands of government through the fidelity government has to buy that gold using u.s dollars but the gold itself is quote unquote us dollars so now you're exchanging us dollars for u.s dollars so you're not

you're not building reserves you're actually using one form of reserves and gaining another but we do have a a program where we over time will start to accumulate some gold so as to supplement our us dollar our results and this is a unique situation out of the fact that we are using the us dollar as a transacting currency if we only had the zim dollar only zoom dollar and then the hard currency was reserved currency then for some of the us dollars we could exchange that for gold then immediately we have gold reserves so it's so the difference is in the choice of the currency that's what is causing us to be in this situation but we are using our minerals for another purpose which is to acquire resources from abroad from certain banks i thank you thank you honorable minister honorable malek [Music] a what [Laughter] management [Music] chief yes okay we are coming thank you madam president for giving me this opportunity to pose my question madam president i think it is now a song the age of state is always saying corruption corruption corruption is the evil in this country madam president i would want to pose my question to the minister of human affairs recently the minister ministry which is presiding over scooped the prize as the most corrupt government department madame president i would want the honorable minister oppress the house what strategies he has used to achieve that fit and what measures is he doing to make sure that he does not continue to occupy that post honorable minister for my face thank you madam president ma'am let me start by thanking the honorable senator i hope i got the question correctly but what i seem to have read is the allegation that the ministry scooped a prize for corruption is it the police i'm here to receive that prize said therapy i'm here to receive that prize madam speaker your ministry the yes madam president the the police is under the ministry what i'm not aware of is the price that we scooped maybe it's on its way oh yeah but nonetheless i did get the gist of the question which i will respond to yes corruption is indeed scheduled it is totally unacceptable and i do admit that we do have some rob cops amongst us amongst the police not every cop is corrupt but definitely yes that issue is there it's a challenge corruption is totally unacceptable everywhere whether it appears at the police or in any other ministry even private sector modern president corruption is there and we are saying it's not acceptable and it's illegal and we must deal with it there are two ways of dealing with it i've said this before and i'll say it again the first one is there is no way one person can be corrupt by themselves it takes two or more to be corrupt this then points it to us the citizens as well we are also aiding corruption police cannot connect themselves they are corrupt because they are being paid by us if we all take a collective responsibility and say to ourselves we don't want corruption madam president will end today because nobody will be prepared to be corrupt nobody will offer a bribe to a police officer and everyone will become a police officer a policing another police officer if we all say no to corruption starting today madam president because what normally happens suppose it's you know it's a traffic offense or whatever it is a police officer at times they even offered his assistant to offer face to say i want a transition we do that and obviously given some challenges that we are encountering they will accept or at times maybe the politicians but it's because we are accepting to give them the bread so i'm saying the starting point all of us are zimbabweans let's say no to corruption and let's take it upon ourselves to expose corruption madam president when it has been exposed we've dealt with it whoever arrested the police officers there's no one who's above the law but it takes you and me to deal with it collectively that's one way of dealing with it and then secondly i'm sure if the honorable senator was listening uh to uh minitam tango when she gave a cabinet brief she spoke about the direction that we've taken of introducing technology to me when i'm in accordance with my my my school of thought that's the way to deal with corruption let's remove the human element what does the styles approved by cabinet where we are going to be installing traffic management systems those in my view they remove that human interface you cannot bribe technology another cannot go for tea so we are deploying that system which will ensure that those who speed and those who cross red robots those who misbehave because the system is so complex and so you know uh sophisticated that it can pick a lot of offenses and because it will be linked to the nara and or to civil rights it will be an integrated solution so if you commit an offense today because it includes the facial recognition cameras it will be able to pick up your registration number and your face your phrase will be linked to the database of the national center which is linked to civil registration so we can tell so that if we pick up the registration number we can tell what the owner of the vehicle is so it will be so integrated and even the police so that way we believe even if the police officer is there but the technology would have captured everything and automatically you'll be fine so you know in short madam president i believe technology is the way to go i think thank you honorable minister thank you so much [Music] maybe before i give to the leader [Music] [Music] but extreme foreign but i think that one should be brought in as a written question so that they go and investigate because the house may need to hear what happened what transpired so that everyone to be in a position to know but on the issue of welfare part of welfare and what the honorable leader of the house um is foreign is [Music] foreign foreign senate state madam president honorable minister majida honorable president of the senate [Music] road [Music] [Music] a [Music] um [Music] questions without notice are time for questions without notices expired honorable thank you honorable president i move that the time for questions not notice be extended oh seconds i uh with how many minutes 15 minutes 15 minutes so it's 10 to 4. supplement and madam president supplement that question yes mother honor report indeed [Music] hey thank you thank you we proceeded madam president and my question goes to the minister of finance of finance okay i wanted to find out from the minister why as a what are the challenges if we were to let the dollar the usd dollar be determined by market forces because at the moment in the country we have the auction red we have the wheeling barrier wheeling cellar and of course the parallel red this also then brings challenges when people are buying because we have different prices if one is swiping if you are buying by cash and also if you are buying by echo cash thank you madam president honorable mr venus thank you madam president i thank honorable senator zinder for that very important question uh is what would be the challenges if the exchange rate was determined by market forces the exchange rate is being determined by market forces now when we establish the auction and we we we were selling easily 50 million us dollars now we've come down to average 25 two days ago we only sold seven million u.s dollars because the demand was quite low um that that exchange rate basically was arising from what you call a dutch auction system which means that you could go there and demand whatever exchange rate you wanted see i want the experience you have no pure your god so so this that's ultimate freedom and choice but then we still realize that perhaps even that expression of freedom and choice of your exchange rate there was still a very the price discovery process was still not good enough because i got you there mary let's introduce now the willing buyer willing seller again hoping for better price discovery then what happened was we noticed that now the exchange rate from the wheeling by winning seller window is higher than the auction window but as of tuesday this week we noticed that even the auction rate rose and we're noticing that they are approaching and converging so the we do believe in a market determined exchange rate and we've done we've taken certain actions to get to that market market exchange rate there is no difficulty in having a market exchange rate because already if someone believes that the power rate is the market exchange rate that's that's already what's determining prices in the shops that was super problem so challenge i'll show you tattoos so so it's no longer an issue in that sense but we're also noticing something madam president that the power rate is not what you call a spot rate but actually it's reflecting the future so so there's a lot of forward you know the forward pricing when someone thinks if i'm going to replace this gadget or widget in in a month's time a puzzle would prison removed therefore i need to charge in such a way that i reflect the exchange rate in that one month time so it's reflecting the future so what were sometimes what we when you think that the power rate is the market rate now actually it is a market rate for the future you know the forward rate which means that we also need to fine-tune some of our policies to deal with the notion of a forward rate rather than export rate one of the reasons why a modern president if i can carry on the gap between the uh official rate whether it's really bad winning solar auction rate and the power rate continues to be there is because there is always a gap between export rate and the forward rate in all the marketing world so sometimes we have to accept good maybe the gap will never be closed but you want it to be narrow and and because that gap is always there perhaps we shouldn't think that by somehow changing the system so dramatically those two rates will emerge they might not so those are some of the the the things that we're noticing for which then we need further fine tuning of the of the of the auction system and our forex determination system thank you i recognize senator honorable company on ritual are you still there [Music] you can go ahead um why uh foreign [Music] order i thank you for the sake of other members i think you can only ask one question at a time if you can respond to that question i understand you but you cannot ask me two questions if you can take that photo thank you you asked about why basically why why retailers who are using power rates and setting their prices are not punished or disallowed as compared to money changes around the street around the corner the the those in the shop's research they are disallowed from using exchange rates other than the auction rate and as of this week is other than the willing buyer will accelerate in fact we've set a variation margin of 10 percent either side of the of the willing by willing sellers into bankruptcy so there are guidelines is how prices ought to be done but you know as i said the honey pot from um deviation is is deep and very juicy and sweet so they keep breaking the law you go after them you find them they break the law again so there's that aspect but there is a level playing field we're not treating shoppers or other retailers differently from money changes in terms of the eyes of the world i think thank you to you here on the ictvs we have had so many issues that we have uh what are being discussed currently and uh just to give you a recap of some of these issues as you anticipated when it comes to the economy we saw uh the minister of finance and economic development professor i'm tulin explaining some of the measures that the government is taking to make sure that the economy is stable and there is also there is also the reduction when it comes to the parallel market rates and we have seen so many questions also being raised upon that to say is this effective what needs to be done and he clearly explained that government is not resting and making sure that they keep arresting people that are causing so much inflation in this country and we've also seen issues to do with wildlife are being discussed to say how can government also ensure that people that live close to those wildlife centers are safe and they can be protected from all this that is happening and like you always know corruption is always talked about when it comes to these houses discussing what needs to be done to ensure that the corruption levels are actually going down here in the country and uh honorable azerbaijan explained that the public needs to stop participating in corruption so that that's the only way we can keep corruption as a country that's these are some of these issues that have been discussed here as we come to life from the parliament building we will be back again and next week as we give you the national assembly from myself you know i bend the crew behind the scenes bye for now you

2022-05-24 10:46

Show Video

Other news