EU welcomes Zim’s exchange market reforms

Zimpapers Politics Bub

THE European Union (EU) has welcomed as “significant” the repeal of Statutory Instrument 81A of 2024, which prohibited businesses from pricing their products using exchange rates higher than the Reserve Bank of Zimbabwe’s (RBZ) interbank rate.

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube lifted the restrictions last Wednesday to allow for flexibility in the pricing of goods and services. EU Ambassador to Zimbabwe Mr Jobst von Kirchmann, on his official X account, commended the development as a “significant and welcome step” that “forms a critical pathway” for Zimbabwe to move toward comprehensive debt restructuring and access to international financing

“It’s repeal represents a significant and welcome step toward further liberalisation of the foreign exchange market and, when fully implemented, will demonstrate Zimbabwe’s continued commitment to the economic reform track of the Structured Dialogue on Arrears Clearance and Debt Resolution led by the government of Zimbabwe,” Ambassador Kirchmann said.

Zimbabwe is engaging its creditors through the engagement and re-engagement policy to chart modalities for debt restructuring. As a commitment to reforms, the Government recently announced it had issued US$307,9 million in Treasury bonds and disbursed US$3,1 million in cash to 378 white former commercial farmers.

The payment aligns with the revised Global Compensation Deed (GCD), an agreement between the Government and white former commercial farmers to pay US$3,5 billion in compensation for improvements made on the farms compulsorily acquired under the land reform programme.

“This track, alongside the good governance and land tracks, forms a critical pathway for Zimbabwe to move toward comprehensive debt restructuring and access to international financing,” Ambassador Kirchmann added.

Chairperson for the Zimbabwe Investment and Development Agency (ZIDA) Mr Busisa Moyo said the move was a “major economic reform” that will create market competition when trading in local currency.

“Freedom of implied rate in pricing goods and services is a step in the right direction. Market competition will now take effect when it comes to trading in local currency. This is a major economic reform for business operators in Zimbabwe. Foreign currency dealers already had this,” Mr Moyo said.

Professor Ashok Chakravarti, a member of the RBZ Monetary Policy Committee (MPC) said the Government was confident that pricing in the market could be freed and the move will stabilise price movement based on competition among businesses.