ED sends Mthuli straight under ZUPCO

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……..whither policy consistency In his 2020 budget, Finance Minister Mthuli Ncube had a detailed section dealing with what he called ‘Subsidies and Other Market Distortions.’ He correctly highlighted that ‘_…..subsidies present an additional risk to macroeconomic and fiscal stability._’ To be specific, he highlighted subsidies related to Command agriculture, ZESA financing and fuel as having led to significant budget deficits in prior years. Amongst other measures, the Minister announced an intention to remove the (then) existing grain marketing subsidies for maize and wheat that were being provided to Grain Millers through the Grain Marketing Board. Ultimately, the GMB and the millers would have had to sell or acquire these two commodities at the market determined prices, even if it meant importing. Before the ink had dried, and in typical ZANU PF style, the President reversed this at a youth rally in Kadoma some weeks ago! The President claimed not to have been consulted when this policy initiative was being crafted. What hogwash! In response, and embarrassingly, Mthuli was forced to issue new measures last week announcing the restoration of the subsidies. This is one of the very many reasons why the citizenry finds it difficult to believe anything that comes out of this government, no matter how noble it seems. Decent policies have been and will continue to sacrificed for political expediency.

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The Lingo


The ‘Old Mutual Implied Rate’ is a comparison between the Old Mutual share price on the London stock exchange / the Johannesburg stock exchange and the Zimbabwe stock exchange. Effectively RTGS is valued at 1:1 with the USD, but this difference in share price gives us the implied countries exchange rate.


Real-time gross settlement systems (RTGS) is a funds transfer system where money transfer takes place from one bank to another on a “real time” basis and “gross” basis. Settlement in the “real time” means that the transaction happens almost immediately.


The Zimbabwe Bond Note is a surrogate currency issued by the Reserve Bank of Zimbabwe. This was originally issued against a loan facility from the African Export-Import Bank. The Bond Note is officially 1:1 however the market seems to have significantly discounted the value of the Bond Note.


The symbol ZAR is the currency abbreviation for the South African rand.