GOVERNMENT remains committed to 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, a Cabinet Minister has said.
In a Press statement today, Finance and Economic Development Minister, Professor Mthuli Ncube, said Government is moving to enhance the country’s foreign exchange management systems as it continues to take significant steps to stabilise the exchange rate through policy measures.
Prof Ncube said additional measures to further strengthen these systems based on economic facts are required.
He added that his ministry has put in place measures to build further confidence, which include entrenching the multi-currency system in law and the inter-bank market exchange in law.
“Government has clearly stated its intention of maintaining a multi-currency system based on dual use of the US dollar and the Zimbabwe dollar. However, the market lacks confidence that the multi-currency system is here to stay for the foreseeable future. To eliminate speculation and arbitrage based on this issue, Government has decided to embed the multi-currency system and the continued use of the US dollar into law for a period of five years,” Prof Ncube.
He added: “The interbank market exchange rate is now being determined by banks on a willing buyer-willing seller basis. The utilisation in all economic transactions of this formal rate is now made mandatory by law. While economic agents are free to price their goods in US dollars or Zimbabwe dollars, and there are no price controls, the equivalence of US dollar prices and Zimbabwe dollar prices for a commodity should be strictly based on the current interbank exchange rate as determined by the Willing Buyer Willing Seller rate.
“No discounting of prices for payments made in US dollars shall be allowed and the law provides for strict criminal and civil penalties including US dollar-based fines, suspension or cancellation of business/trading licences for offenders, among other penalties.”
Prof Ncube said Government is working on measure to stabilise the price of fuel, maize meal and bread, which have seen the downward review of Government fuel levies and release of fuel from the strategic reserve.
He added that Government will expedite the importation of maize available in Malawi and Zambia, while wheat will be sourced from cheaper source markets as well
Government, said Prof Ncube, will release 20 000 metric tonnes per month to millers for the next three months beginning in July 2022 at the import parity price calculated at the prevailing interbank rate.