FINANCE Minister, Mthuli Ncube on Monday traversed a tight passage as he balanced between the country’s pressing economic needs and the tide of rising inflation prompted by external factors and low confidence levels in the local currency.
The treasury boss is currently battling surging inflationary pressures which have been worsened by the Ukraine/ Russia war and blamed legacy perceptions prompted by the past experiences of the Zim$ during the 2008 hyper-inflationary as chief among the causes of current challenges.
He insisted that all the economic fundamentals are well in place and underscored that the country is in possession of significant US$ bank balances as well as inflows which are not meaningfully flowing into the economy, which he said are not productively flowing well.
“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. Amongst other penalties,” he said.
He said the utilisation of the interbank rate in all economic transactions of this formal rate is now made mandatory by law but gave traders the liberty to price their goods in US dollars or Zimbabwe dollars as they wish without any price controls.
Ncube said the government has been working flat out to prevent fuel prices from breaching the US$2,00 mark by putting in place downward reviews of government fuel levies and releasing fuel from the Strategic Fuel Reserve.
“This week alone, the government completely removed the levy on Diesel, brought it to Zero Cents, and significantly dropped the levy on Petrol,” he said. Among other measures, Ncube clarified the government’s position on the use of the US dollar as he maintained that it will be used as a tradable currency into the foreseeable future.
“To eliminate speculation and arbitrage based on this issue, the 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,” he said.
The treasury boss also moved to reduce the price of wheat to millers to ZW$239 360 per tonne after committing to inject 20 000 metric tonnes of wheat per month which will be sold at a price equivalent to US$680.
He also announced an immediate release of 7,000 tonnes of maize and a further release of 27 000 tonnes of maize from the Strategic Grain Reserve to millers at a price of ZW$75 000 plus the US$90 at the prevailing interbank rate. “The Government of Zimbabwe 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,” he added.