HARARE – The Government has said the tight fiscal and monetary policy measures put in place to stabilise the economy will continue.
In a statement released on Thursday, 07 September, the Ministry of Finance and Economic Development, said that it has made considerable progress in fostering domestic macroeconomic stability.
The Ministry said since the introduction of the measures several months ago, the Zimbabwe dollar has stabilised and inflation has been falling.
Read the full statement by the Ministry of Finance and Economic Development below:
1. Government reaffirms that considerable progress has been achieved in fostering domestic macroeconomic stability by implementing a broad range of fiscal and monetary stabilisation measures.
2. Pursuant to the statement issued by the government on the 29th of May 2023, the official exchange rate strengthened from about US$1: ZWL$6900 to US$1: ZWL$4500 highlighting the positive impact of policy interventions by the Government.
3. Inflation month on month dropped commensurately from +30% in June to -15% in July.
4. The government, in this post-election period, is therefore committed to ensuring that such macroeconomic stability endures and is sustainable through the implementation of sound macroeconomic policies, to achieve envisaged economic growth targets.
5. In this regard, the government will continue with tight fiscal and monetary policy measures that include:
Adopting all external liabilities being funded transparently through the national budget which has been completed;
Increasing the retention of domestic foreign currency sales by 100% – This has resulted in domestic businesses accessing more foreign currency from the market and translating into additional US dollar deposits in the banking system;
Promoting the use of domestic currency by using measures such as payment of corporate taxes and Government Agencies’ fees in local currency, and additional measures are under consideration;
Making sure that there is no backlog in the foreign currency auction system – the government will continue to support the Auction with foreign currency, and pay winning bids at the auction within 24 hours of award.
6. In order to encourage the banking of foreign currency which is mainly in the informal sector while promoting the use of the local currency, the Government will;
Continue promoting the use of domestic currency by enforcing that:
i) All Government Agencies including Parastatals will continue to collect their fees in local currency; and
ii) Payments to ZESA by non-exporters will continue to be made in ZWL.
Local interbank foreign transactions IMT tax will be maintained at 1%
POS IMT tax in foreign currency will be maintained at 1%
7. The Reserve Bank of Zimbabwe (RBZ) will continue with the issuance of Non- Negotiable Certificates of Deposits (NNCDs) in order to mop up excess liquidity, on terms that ensure regulated access to the NNCDs liquidity by banks.
8. 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.
9. Strengthening of Surveillance and Monitoring by the Financial Intelligence Unit (FIU) in order to stem speculative activity in the economy.
10. To continue with the issuance of gold coins and gold-backed digital tokens as a store of value and for transaction purposes, while supporting financial inclusion.
11. To further continue with efforts of mopping up excess liquidity in the market and regulating payments to government contractors.
The government remains fully committed to the maintenance of macroeconomic stability and will continue to revive the purchasing power of the Zimbabwe dollar and the restoration of trust and confidence in the economy.