Printing real money?

24 01 2009

Some outlets in Zimbabwe are licenced to deal in forex (foreign currency). For them it’s been a boon and although they are pricey at least we have been able to get most things. The price they have to pay is a 7% levy on turnover to the revenue authority, and yes, they had to buy the licence too, often for as much as US$20,000. Now they might be a little worried. The government, in an attempt to placate the civil service, will start paying them in coupons redeemable at the aforementioned outlets. These companies will then be allowed to deduct the value of the coupons from the 7% levy. Does this mean that the government is effectively printing US dollars?

  • If there was enough US dollars coming in the government would be able to pay the civil servants itself.
  • Does this mean that the government does not trust its own collection system?
  • Are they just finding a cheaper way to administer their own wages?
  • I can promise you it will be abused!

The local press has been abuzz with the Reserve Bank governor’s plan to “randify” the economy i.e. link it to the S. African rand. I could never see this happening unless the South African REALLY wanted to devalue their currency though I was told today that it was scuppered by COSATU (Congress of South African Trades Union). They said only if Bob agrees and is seen to share power. That of course will not happen.

I heard most of this today at work from various customers. One said “I’d love to believe this but..” and then recounted how she’d heard that the army was “promising” a coup within the next month. It’s almost certainly just a pressure tactic – I really don’t’ think that even our army would advertise and impending coup!