Currency devaluation once again on the agends

Zimbabwe is again wrapped up in a debate on whether or not to devalue its currency, the Zimbabwean dollar, PANA reported on Tuesday. The debate often surfaces at this time of the year when the country begins to sell its tobacco crop, Zimbabwe’s biggest export. The country is the third largest exporter of tobacco in the world, and expects tobacco auctions which open on 24 April to net about US $400 million. As has become tradition, tobacco farmers are demanding the government devalue the dollar, officially pegged at 55 units to the greenback, or else they would withhold their crop from the auction floors. For years, growers, mainly white commercial farmers, have managed to wring currency devaluation concessions from the authorities at the start of the tobacco auctions through the threats to withhold the crop, PANA reported. This year, however, the government said it would stand its ground, and is bringing into play its controversial land reform programme to frighten them from their demands, which are strongly supported by the export sector. The authorities said the farmers’ threats and demands for devaluation of the Zimbabwe dollar by up to 100 percent, underline the need to de-monopolise farming in Zimbabwe, particularly of cash crops such as tobacco. Finance Minister Simba Makoni said the demands are mainly motivated by profiteering. He vowed the government would not give in. Proponents of devaluation, who include banks and exporters from all sectors of the economy, argue this would stimulate exports and earn the country the desperately needed foreign currency.