Vusumuzi Dube
Judith Phiri, Business Reporter
POST-ELECTION period, the Government has said it will continue with the tight fiscal and monetary policy and reaffirmed its commitment to ensure macroeconomic stability endures and is sustainable through implementation of sound macroeconomic policies, to achieve envisaged economic growth targets.
Pre-election period, the Government achieved considerable progress in fostering domestic macroeconomic stability by implementing a broad range of fiscal and monetary stabilisation measures.
In a statement on Thursday, the Ministry of Finance and Economic Development said positive impact of policy interventions by the Government continue to be witnessed.
“Pursuant to the statement issued by government on the 29th of May 2023, the official exchange rate strengthened from about US$1: ZWL$6900 to US$1: ZWL$4500 highlighting the positive impact of policy interventions by Government. Inflation month on month dropped commensurately from +30 percent in June to -15 percent in July,” read part of the statement.
“Government remains fully committed to the maintenance of macro-economic stability and will continue to revive the purchasing power of the Zimbabwe dollar and the restoration of trust and confidence in the economy.”
The Ministry said 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.
It said the increasing of the retention on domestic foreign currency sales 100 percent has resulted in domestic businesses accessing more foreign currency from the market and translating into additional US dollar deposits in the banking system.
The Ministry said 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 and additional measures are under consideration.
As well as making sure that there is no backlog in the foreign currency auction system as the government will continue to support the Auction with foreign currency, and pay winning bids at the auction within 24 hours of award.
“In order to encourage banking of foreign currency which is mainly in the informal sector while promoting use of the local currency, Government will continue promoting 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,” read part of the statement.
The Ministry said Government will ensure local interbank foreign transactions IMT tax will be maintained at 1 percent and POS IMT tax in foreign currency will be maintained at 1 percent.
It said 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.
While, to sterilise excess liquidity already injected into the economy, Government will continue with its policy interventions like issuance of Treasury bills in conjunction with appropriate monetary policy tools being implemented by the RBZ.
The Ministry said: “The strengthening of Surveillance and Monitoring by the Financial Intelligence Unit (FIU) in order to stem speculative activity in the economy will continue. The Government will continue with the issuance of gold coins and gold-backed digital tokens as a store of value and for transaction purposes, while supporting financial inclusion. As well as further continue with efforts of mopping up excess liquidity in the market and regulating payments to government contractors.”
Bongani Ndlovu