Post-poll economic stability to continue

The economic stability that prevailed before the elections, is expected to continue going forward, as the Government has declared its commitment to the maintenance of macro-economic stability, revival of the Zimbabwe dollar’s purchasing power and restoration of trust and confidence in the economy.

Some of the measures that have brought general stability in the economy, will continue to be implemented, including the issuance of gold coins and gold-backed digital tokens as a store of value and for transaction purposes, and supporting financial inclusion.

The Government will continue with efforts of mopping up excess liquidity in the market and regulating payments to Government contractors.

In a statement yesterday, the Ministry of Finance and Economic Development reaffirmed that considerable progress has been achieved in fostering domestic macroeconomic stability through implementation of a broad range of fiscal and monetary stabilisation measures.

From the end of May, the official exchange rate strengthened from about US$1: $6 900, to US$1: $4 500, indicating “the positive impact of policy interventions by the Government”.

To underline the economic stability, month-on-month inflation dropped commensurately from +30 percent in June to -15 percent in July.

The Ministry of Finance said in this post-election period, the Government is “committed to ensure that such macroeconomic stability endures and is sustainable through implementation of sound macroeconomic policies, to achieve envisaged economic growth targets”.

Therefore, the Government says it will continue with the tight fiscal and monetary policy measures that include having all external liabilities being funded transparently through the national budget, which has already been completed, and increasing the retention on domestic foreign currency sales to 100 percent, which has resulted in domestic businesses accessing more foreign currency from their customers, and that has been translated into additional US dollar deposits in the banking system as businesses bank the currency coming through the tills.

In addition, the Government will continue promoting the use of the local currency by using measures such as payment of corporate taxes and Government agencies’ fees in local currency.

More measures are also under consideration, including ensuring there is no backlog in the foreign currency auction system, now almost entirely done by banks bidding for wholesale currency that they sell on to their customers to top up what they get from customers.

The Government will continue to support the auction with foreign currency, and pay winning bids at the auctions within 24 hours of award.

To encourage the 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 the Zimbabwe dollar.

The local interbank foreign transactions Intermediated Money Transfer Tax will be maintained at 1 percent while the point of sale IMT tax in foreign currency will be maintained at 1 percent.

Added the statement: “The Reserve Bank of Zimbabwe will continue with the issuance of Non-Negotiable Certificates of Deposits in order to mop up excess liquidity, on terms that ensure regulated access to the NNCDs liquidity by banks.

“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 Reserve Bank of Zimbabwe and strengthening of surveillance and monitoring by the Financial Intelligence Unit in order to stem speculative activity in the economy.”

Consumers are pleased with the continued macro-economic stability and have been pleading with the Government to ensure the stability continues so that their earnings are not eroded by inflation.

Currency manipulators, understood to have been working in cahoots with the country’s detractors, had hoped to use price increases ahead of last month’s elections to sway votes in favour of the opposition.

However, the plan failed dismally after the Government moved fast to bring order in the market.


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