Opposition Citizens Coalition for Change (CCC) Harare East legislator Tendai Biti says the Reserve Bank of Zimbabwe (RBZ) foreign currency auction system continues to be a vehicle of arbitrage and rent-seeking behavior.
The auction system was introduced in June 2020 in a bid to bring transparency and efficiency to the trading of foreign currency in the economy as the local currency was diminishing in value.
In a tweet, the former Minister of Finance in the Government of National Unity (GNU) said the recently introduced gold coins are a new form of looting.
“The auction system continues to be vehicle of arbitrage and rent behavior. Rigged rate of 1:621 still lags behind market rate of 1:750 .There is no answer except corruption as to why there is no free float of ZW$ Significantly allocations are decreasing to US$11m from highs of $50 Million.
“The obvious deceleration of activity on the auction is explained by the increased energy in gold coins production. Gold coins are new form of arbitrage and looting. A bank heist serving to transfer resources from public coffers to cartels. As of 22 Sept 9516 coins sold for ZWL$9 Billion.
“Gold coins are being sold in local currency at a discounted rate that is 300% below market thus creating arbitrage This explains why 95 % of purchases are in ZWL$. The @ReserveBankZIM has spend roughly US$ 18m in buying 9516 coins which it has sold at around US$10m.This is theft,” said Biti.
He said dealing with corruption and dollarizing the economy will be a remedy to the current economic down turn.
“For a country without any reserves to back its currency and current account gold coins are zany. The suggestion that they are containing inflation is also fiction. Official inflation figures remain above 280%. We restate that this economy needs genuine structural reforms not mascara.
“We restate that the solutions are simple, dollarize, float the ZW$, remove export surrender requirements, pay workers US$, restore pensions, deal with corruption, and pursue fiscal consolidation. Fund social services. Above all attend to political reforms and allow a free and fair election,” he said