Vusumuzi Dube
Judith Phiri, Business Reporter
THE Government has lifted all restrictions on importation of basic goods, as one of the measures of maintaining macro-economic stability and the elimination of harmful and destabilising arbitrage conditions that have pervaded the economy at the expense of the generality of citizens.
This comes at a time when Cabinet earlier this week set up a committee to quickly investigate, monitor and make appropriate recommendations with a view to bringing sanity to the price hike situation.
There has been an outcry over the spiraling prices of the 14 basic goods especially bread, flour, cooking oil and mealie-meal.
In a statement, Finance and Economic Development Minister Professor Mthuli Ncube revealed that all restrictions on importation of basic goods have been lifted.
“In order to enhance the supply of basic goods to the public, all basic goods will no longer be subject to import licences, and will also come into the country free of import duties and taxes,” he said.
Among other measures, he said there will be a 100 percent retention of domestic foreign currency earnings in order to promote the banking of domestic sales foreign currency in the banking system.
The Minister said the Reserve Bank of Zimbabwe (RBZ) will with effect from 15 May 2023, exempt all proceeds from domestic sales in foreign currency from the 15 percent surrender requirement.
Minister Ncube added: “All external loans to the Government will now be transferred from the RBZ to Treasury. The Foreign Exchange Auction System will be further fine-tuned and will now auction a pre announced envelope, on a pure Dutch auction basis.”
He said domestic interest rates remain a variable of focus and are one of the main tools available for monetary authorities to discourage speculative borrowing and to reduce the velocity of the Zimbabwe dollar and thus promote stability.
Hence, measures to restore real savings rates in the economy are therefore necessary.
The Minister said the RBZ through its Monetary Policy Committee (MPC) shall continue to review the domestic interest rate framework to allow domestic currency savings interest rates to be above the perceived rate of expected devaluation for holding ZWL balances, to be attractive to savers.
“In the short-term, Government needs to immediately cause short-term interest rates of tenors up to 6 months to rise sharply, with longer term rates remaining low, to reflect future inflation expectations. This will squeeze out speculative demand for both ZWL and USD.”
He said Government will endeavour to promote the growing and committed use of the local currency for domestic transactions by ensuring that levies and fees charged by its affiliated agencies and service providers, are to be paid for in local currency.
In terms of the gold coins and gold backed digital tokens, Minister Ncube said the Government was very pleased with the uptake of both the physical gold coins since they were introduced as well as the more recently issued gold backed digital tokens.
“Government, through the RBZ shall continue to assure public confidence in both instruments by ensuring that at all times, the gold coins and gold backed digital tokens remain fully backed by physical gold reserves,” he added.
Bongani Ndlovu