Former Finance and Economic Development Minister Tendai Biti said Mthuli Ncube’s latest measures will trigger hyperinflation and price increases.
Biti also argued that the reason why Ncube and ZANU PF refuse to join the Rand Monetary Union (RMU) is pride.
In an interview with the Daily News on Wednesday following Ncube’s announcement that the government was floating the Zimbabwe dollar, Biti said:
The move by Mthuli Ncube is an ill-thought one. We are currently facing shortages of foreign currency and we have no productivity in Zimbabwe to support economic growth and the local dollar.
Floating the Zimbabwe dollar will result in the exchange rate shooting up, triggering hyperinflation and price increases.
What Mthuli has done will result in a serious devaluation of salaries. For example, today people who are earning $7 000 with the current parallel market rate of 1:40 are earning around US$200.
In just a few weeks the parallel rate will hit 1:100 and that is when it will be clear that Mthuli has failed.
The other thing that will follow is the shortage of every essential that is imported, including electricity, fuel and medication.
If we do not have these essentials like electricity and fuel then we cannot talk about production and economic growth.