Government reaffirms the continuation of policy measures to stabilise the economy

Government reaffirms the continuation of policy measures to stabilise the economy

Nevanji Munyaradzi Chiondegwa

The government remains fully committed to maintaining macro-economic stability and will continue to revive the purchasing power of the Zimbabwe dollar and restore trust and confidence in the economy

The considerable progress achieved so far in fostering domestic macroeconomic stability has seen the official exchange rate strengthened from about US$1: ZWL$6900 to US$1: ZWL$4500 highlighting the positive impact of policy interventions by the Government. Month-on-month inflation also dropped commensurately from +30% in June to -15% in July.

The Ministry of Finance has said that the government will continue with the tight fiscal and monetary policy measures that include adopting all external liabilities being funded transparently through the national budget which has been completed. Increasing the retention of domestic foreign currency sales by 100%. This has resulted in domestic businesses accessing more foreign currency from the market and translating into additional US dollar deposits in the banking system.

The Government will continue promoting the use of domestic currency by using measures such as payment of corporate taxes and Government Agencies’ fees in local currency. Additional measures include making sure that there is no backlog in the foreign currency auction system-government will continue to support the Auction with foreign currency, and pay winning bids at the auction within 24 hours of award.

To encourage the banking of foreign currency which is mainly in the informal sector while promoting the use of the local currency, the Government will continue promoting the use of domestic currency by enforcing that all Government Agencies including Parastatals will continue to collect their fees in local currency, and payments to ZESA by non-exporters will continue to be made in ZWL. Local interbank foreign transactions IMT tax will be maintained at 1% and POS IMT tax in foreign currency will be maintained at 1%

The Reserve Bank of Zimbabwe (RBZ) will continue with the issuance of Non-Negotiable Certificates of Deposits (NNCDs) in order to mop up excess liquidity, on terms that ensure regulated access to the NNCDs liquidity by banks.  To sterilize excess liquidity already injected into the economy, the Government will continue with its policy interventions like the issuance of Treasury bills in conjunction with appropriate monetary policy tools being implemented by the Reserve Bank of Zimbabwe.

Extra measures include strengthening surveillance and monitoring by the Financial Intelligence Unit (FIU) in order to stem speculative activity in the economy and continued issuance of gold coins and gold-backed digital tokens as a store of value and for transaction purposes while supporting financial inclusion. The government will further continue with efforts to mop up excess liquidity in the market and regulate payments to government contractors.