Monetary policy measures yield formal, informal prices convergence

GOVERNMENT’s comprehensive monetary policy measures continue to yield positive results in the economy resulting in significant narrowing of the disparity between formal and informal prices while gradually shifting towards the desired convergence, Cabinet heard yesterday.

Zimbabwe had in the past battled wild exchange rate movement as inflation weakened the value of the old currency while speculators capitalized on the situation to inflate prices, in the process creating arbitrage opportunities emanating from the exchange premium differences between the formal and informal economy.

Government had to adopt the new structured currency, the Zimbabwe Gold (ZiG) early April, among other tight monetary policy measures, which have brought significant market stability resulting in prices for most basic commodities such as cooking oil and mealie-meal recording a notice-able reduction in recent weeks.

In his post-Cabinet media briefing yesterday, Minister of Information, Publicity and Broadcasting Services, Dr Jenfan Muswere, said Cabinet received and noted the update on prices and availability of basic commodities in the economy during the second quarter covering the period April to June 2024, as presented by the Minister of Industry and Commerce, Nqobizitha Mangaliso Ndlovu.

Dr Muswere said the second quarter was largely characterised by stability in the prices and availability of basic commodities across all provinces, both in ZiG and in US-dollar terms.

He noted, in particular that the ZiG currency slightly appreciated in value by 0.51 percent against the greenback during the period under review, with the tight monetary stance that has been maintained having resulted in exchange rate stability, which has translated into the stability of prices of basic commodities on the market.

“The prices of most basic commodities in the formal sector are gradually converging with prices in the informal market and the prices of some basic commodities, such as cooking oil and mealie-meal decreased, in response to the measures put in place to deal with price increases witnessed during the first quarter of 2024,” said Dr Muswere.

“There is improved ZiG uptake in the market, with transactions on Point of Sale (POS) swipe machines seen to be dominant in major formal retail outlets. Most outlets have pegged their products in ZiG while few still display the prices in United States dollars, although the prices are payable in both currencies,” he added.

“In most retail shops, 80 percent of the formal retailers’ transactions are currently in ZiG while 20 percent are in United States Dollars.”

Economic analysts, with concurrence from industry leaders and international organisations such as the International Monetary Fund (IMF) and the African Development Bank, have roundly embraced the ZiG as a masterstroke in fostering stability in Zimbabwe’s economy.

Recent statistics from Zimstat also indicate that the ZiG has significantly tamed inflation, which has dropped to negative levels in the last two months, thereby protecting consumers from price volatility while enhancing disposable incomes.

The minister said Cabinet further noted that the market is well stocked with mealie-meal and its price has been stable, ranging between ZiG100.01 and ZiG103.8, and between US$5.30 and US$8.50 for 10-kilogramme pack. He said the price of a two litre bottle of cooking oil has been stable as well, ranging between ZiG54.63 and ZiG56.50 and between US$3.30 and US$4.70.

“Bread price has also remained stable, ranging between ZiG14 and ZiG14.50 and between US$1 and US$1.20. Sugar supply has relatively improved countrywide and its price has remained stable during the months of May and June 2024.

“The price of laundry soap remained unchanged, ranging between ZiG23.13 and ZiG23.50 in local currency,” said Dr Muswere.

On food deficit mitigation strategy and urban transfer programme, Dr Muswere reported that a cumulative total of 51 415.02 metric tonnes of grain had been distributed to vulnerable and food-insecure people by 25 June as per the report presented by the Minister of Public Service, Labour and Social Welfare, July Moyo.

He said in Manicaland province, 7 780.64 metric tonnes of food have been distributed during the period under review, while Mashonaland Central Government had distributed 5 891.09 metric tonnes, Mashonaland East 5 207.06 metric tonnes and Mashonaland West 6 078.17 metric tonnes.

In Masving, 10 243.25 metric tonnes were distributed during the period under review, Matabeleland North 3 215.13 metric tonnes, Matabeleland South 4 803.48 metric tonnes and in Midlands 7 845.30 metric tonnes.

“Additionally, a total of 2 816.80 metric tonnes has been collected to date across all provinces under the Zunde RaMambo/Isiphala Senkosi programme.

Cabinet advises that all the people benefitting from the Food Deficit Mitigation Strategy and Urban Transfer Programme in both rural and urban areas will be expected to participate in public works programmes,” said Dr Muswere.