Year-end inflation seen below 20pc

Zimbabwe’s annual inflation rate is expected to end the year slightly below 20 percent and to range between 10 percent and 20 percent in 2024 on the back of continued tight monetary and fiscal policies, Treasury says.

Finance, Economic Development and Investment Promotion Minister Mthuli Ncube, presenting the 2024 National Budget, said domestic prices had been relatively been stable since the third quarter of the year, as reflected by month-on-month inflation, which declined from 12,1 percent in June 2023 to 4,5 percent in November 2023.

“Concomitantly, the annual headline inflation declined from 30,9 percent in June 2023 to 21,6 percent in November 2023.

“In the outlook, annual inflation is expected to remain relatively stable and is projected to end the year 2023 slightly below 20 percent, and in 2024, annual inflation is anticipated to end the year between 10 percent and 20 percent, reflecting continued tight monetary and fiscal policies,” he said.

The government has over the past few months instituted a plethora of measures to stabilise inflation and exchange rate volatility.

Among the measures were the value for money audits, transfer of external payment obligations from the central bank to the Treasury, hiking the bank policy rate, payment of duty in foreign currency, and payment of 50 percent corporate tax in Zimbabwe dollars.

The measures were also aimed at instilling discipline and curbing speculative behaviuor, targeting the exchange rate and the broader macro-economy.

Moreover, the central bank introduced gold coins as an alternative investment, helping to mop up excess liquidity in the market.

Minister Ncube said the introduction of the wholesale foreign exchange auction, on the back of the recent liberalization of the exchange rate, saw the parallel market premium decline from a peak of over 140 percent in May 2023 to around 35 percent in November 2023.

“Fiscal restraint and tight monetary policy, together with a healthy current account position, provide the necessary conditions for currency and price stability. Specifically, the Central Bank will target a month-on-month inflation rate of less than 3 percent throughout 2024,” he said.

Minister Ncube said growth in both the reserve money and broad money has significantly slowed down, having peaked in June 2023.

He said the reserve money and broad money annual growth declined from 3 074.25 percent and 1 174.94 percent in June 2023 to 1 406.81 percent and 719.66 percent in September 2023, respectively.

“The decline in monetary aggregates was largely due to the combined effect of tight monetary policy and prudent fiscal policy measures,” Minister Ncube said.

According to the Minister, the fiscal policy thrust for the 2024 National Budget is guided by the need to maintain a sustainable budget deficit within the SADC macroeconomic convergence threshold of not more than 3 percent of gross domestic product (GDP).

He said that going into 2024, the government seeks to consolidate and entrench stability to facilitate economic transformation and preserve disposable incomes.

Economist Zvikomborero Sibanda said the minister should have given an outright direction as to how he is going to manage the exchange rate.

“Since he paints a picture of stability, reality on the ground shows that there is still a lot to do around financial sector stability,” he said.

According to the budget, the financial sector has remained sound and stable, with strong capital and liquidity positions as well as strong risk management practices on the back of proactive, holistic, and supportive stabilization measures by the authorities.


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