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*Forex Rate "Stability" Unsustainable, Says Tendai Biti*

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Former Finance Minister Tendai Biti has challenged the government to find a lasting solution to current economic challenges instead resorting to what he considers unsustainable short-term measures.

Biti, who is CCC deputy president, made the comments in response to a statement issued by the Reserve Bank of Zimbabwe (RBZ) this Monday outlining the resolutions made by its Monetary Policy Committee (MPC) on Friday last week.

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Among other things, the MPC resolved to keep the Bank policy rate at 200% per annum.

The MPC said it had “noted with satisfaction that a combination of the tight monetary policy stance, favourable uptake of gold coins, effective monitoring and enforcement of market discipline… had resulted in the stability of the exchange rate and a decline in inflationary pressures.”

Biti argued that the “stability” will soon be a thing of the past as the government will need to pay civil servants and fund election promises resulting in an increased broad money supply. Said Biti:

> The economy can not be fixed by short-term measures that delay a crisis. Controlling money supply through suspension of contractual payments can buy short-term relief but contractors will have to be paid.

> Further, the taps will open soon to support Command Agriculture Year-end bonuses must be paid & as Zim gets closer to an election there will be a floodgate of broad money as election promises are monetized.

> The rate will implode unless the Zim$ is floated & full open use of the US$. A permanent lasting solution is required and not cheap mascara.

> Government remains the biggest generator of broad money supply due to an expansionary fiscal policy.

> They can’t live within their means & that is the challenge. Withholding payments, arresting or threatening business people can never be a sustainable tool of macro stability.

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