Chronicle Editor
Oliver Kazunga, Acting Business Editor
THE Zimbabwe Revenue Authority (Zimra) says the bullish run on the local bourse last year was due to excessive money creation on the market resulting in a sharp rise of inflation pressures.
In January 2017, inflation was at -0.65 percent and closed the year at 3.46 percent.
In a revenue performance report for the year ended December 31, 2017, Zimra said due to excessive money creation on the Zimbabwe Stock Exchange (ZSE) last year, market capitalisation skyrocketed from about $4 billion in January to over $15 billion in November.
“The ZSE was bullish for the greater part of the year. Capitalisation shot up from just under $4 billion in January 2017 to over $15 billion in November 2017, raising fears of excessive money creation similar to the case during the peak of hyperinflation in 2008.
“However, the local political events dampened the bulls somewhat and the market capitalisation ended the year at $$9.6 billion, which is a rise of 140 percent during the year hence fueling inflation growth,” said Zimra board chairperson Mrs Willia Bonyongwe.
A liquidity crunch continued to the end of the year leading to the multi-tier pricing system in the economy generating significant inflation pressures.
Mrs Bonyongwe also noted that the multi-tier pricing model boosted the parallel currency market despite the gazetting of Statutory Instrument 122A of 2017 to criminalise currency trading.
‘To curb inflation, there is need to destroy the parallel market but as indicated above, this is not achievable in the short term, other things remain equal.
“There is also indefensible price increases in the supermarkets of up to 200 percent, fueling inflation further and, in a US$ environment, rising inflation becomes a major threat to economic growth,” she said.
During the period under review, Zimra maintained robust revenue enhancement strategies to uphold efficiency in revenue collection.
The tax collector exceeded its gross annual performance by 17 percent while net collections after deducting refunds were surpassed by 10 percent.
Gross revenue collections were $3.978 billion while net collections were $3.75 billion surpassing the target of $$3.4 billion by $350 million.
@okazunga
derick.khumalo