Well, the Zimbabwean government has now been finally forced to admit what we have known all along: Bond notes are not equal to real US dollars despite what the law says (or used to say). Nor are RTGS balances that now flood our accounts equal to US dollars. We all know that. We have known it for a long time.
Here is another thing we know: the government stole our United States dollars. The ones that were in our accounts and replaced them with RTGS numbers which we already know are not equal to US dollars. In a clandestine act of legal robbery, they transferred numbers picked from thin air and took out billions of USD from banks.
What’s the money situation like right now
At the moment when the latest Monetary Policy was created:
- There are 3 458 175 RTGS dollar accounts
- These have a total of $9.56 billion RTGS dollars in them
- In contrast, there are 133 633 FCA or real USD accounts
- These have about $674 million USD in them
This means FCA accounts constitute only about 7% of the entire money in our banks. This explains why dollarisation is not an option. There simply aren’t enough dollars period.
How the government robbed us?
They actually employed a myriad of methods but we are going to keep it simple. Back in 2009, we had an almost pure money supply. For simplicity’s sake let us assume 100% of the money in banks was USD. The problem was that the Zimbabwean government fresh off from printing money during the 2008 era was hurting.
Their revenue collection efforts were bringing in about $4 billion dollars. Thanks to legacy debts, a bloated civil service, populist activities such as command agriculture and just plain old corruption that $4 billion could not sustain government expenditure to the levels that the ruling government wanted over the years. At some point, they could not even pay civil servants at once.
Faced with such a crisis the government could not print money in the traditional sense as the USD was now the primary currency. They were however in charge of the RTGS system. So they proceeded to send RTGS dollars to for example the bank accounts of civil servants. Whenever these civil servants withdrew money they were taking real dollars deposited by others.
As this continued to happen month after month the ratio of real USD versus RTGS dollars continued to decrease. This created a liquidity and cash crisis. You see RTGS dollars are invisible, you cannot actually touch and carry them around. As these continued to replace real USD there were no longer enough real USDs to meet people’s withdrawals. People were now spending hours in queues as they waited to get their hands on real USD.
Faced with such a crisis the government decided to make real RTGS dollars in the form of bond notes to ease the cash crisis. Pegged at 1:1 with the USD and backed by the ever mysterious African Export-Import Bank loan the bond note appeared. The reason given for us getting bond notes instead of getting the real USD from this bank was that people would externalise real USD while the bond notes could only be used in Zimbabwe.
The facility was supposed to guarantee the value of the bond notes. If I were to guess, I would say if this facility indeed existed, the government went and plundered it too while we were not looking. It’s the reason why the governor did not bother to mention it when he, in essence, devalued the bond note.
The RTGS balances continued to grow and the USD balances to shrink despite the government claiming the two were equal. In fact, the only reason they put up with the charade for so long was because they wanted to expropriate people’s real USD at a favourable rate. The most shocking thing for me was the claim by the RBZ governor at some point, that he didn’t know where the RTGS dollars were coming from. Now that is pretty low even by RBZ standards.
A culture of impunity and opaqueness
Now here we are, poorer and relieved of our USD. The only reason why this is legal is because the Zimbabwean government likes to make laws that will shield it from accountability. It’s the reason why this country continues to rank so lowly on corruption and business indexes. The reason why mega deals are signed but never see the light of day.
Laws are created to shield those in power. The RBZ and most government policies continue to be made in dark alleys away from public scrutiny. Parastatals and their politically connected leaders continue to flout laws with impunity. Most do not even bother to produce audited statements on time as the law requires. They cannot even be bothered to obey the law and produce a Monetary Policy on time as the law requires.
To them, the law is meant for us commoners. In fact, the government has on multiple occasions shown a willingness to use lethal force upon citizens whenever they think said citizens are breaking the law. Say what you will, the government robbed us, there is no denying that now.
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