‘Measures to insulate Zimdollar against erosion sustainable’

Zimbabwe Finance Minister Mthuli Ncube arrives at the Parliament of Zimbabwe to present the national annual budget, a few days after the introduction of a new currency in the country, in Harare, on November 14, 2019. (Photo by Jekesai NJIKIZANA / AFP) (Photo by JEKESAI NJIKIZANA/AFP via Getty Images)
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HARARE – Measures put in place to insulate the local currency against erosion are sustainable beyond the lockdown, Finance and Economic Development Minister Professor Mthuli Ncube has said, despite the reopening of borders seeing more illegal foreign currency trading.

The exchange rate, both the auction rate and the black market rate, have been stable in recent months, and this has been reflected in stable prices and in some cases falling prices of basic goods.

Prof Ncube was not worried about borders reopening to cross border trade because part of the reforms was the tight control of liquidity, which means there are simply not enough Zimbabwe dollars in circulation to affect exchange rates.

That tight control was built on his monthly budget surpluses, which controls total money supply, and on measures taken to prevent vast anonymous transfers of money already in circulation.

“I think there is tight liquidity in the market as long as we are able to manage things the way we desire.

“Liquidity is fairly tight. It should be tight as part of our management of monetary policies, management of the stability. We want to keep it that way so we do not see any risk at all,” declared Prof Ncube.

He explained the five measures put in place to plug leaks and abuse of the available fiscal systems to insulate the currency. All the measures remain in place.

“The policies are durable. They are clear and we are compliant to the policies. Policies pertain to the design of the auction system that remains in place and we are supporting it as Government.

“For the effective regulation of mobile (money transfer) platforms, we put in place various regulations. There is fiscal discipline, consolidation and managing Government finances, monetary policy targeting in terms of targeting reserve money, the reserve balance again that remains in place,” he said.

He also talked of the promotion of exports which is being ably aided by a firm ground cultivated by fruitful re-engagements being led by Foreign Affairs and International Trade Minister Dr Sibusiso Moyo.

Zimbabwe’s investment-luring drive has attracted the attention of capital and business leaders and fund managers across the globe including the United States as evidenced by mega deals involving US companies such as John Deere.

“It involves promoting our exports and competitiveness. Luckily our currency is doing that for us, so that is why we are recording a current account surplus.

“So all those five policy areas remain in place. They are durable and will see us through in terms of keeping the currency stable and keeping the stability that we see and therefore lead to the gradual fall in prices that we are beginning to experience here and there,” said Minister Ncube.

Zimbabwe Cross Border Traders Association president Dr Killer Zivhu has implored the Government to give access to the auction system for cross border traders. This appeal buttresses Professor Ncube’s assertion that the measures put in place are working and are not easy to abuse, hence the wish of the traders to now enter the formal economy. “We appeal to Government to introduce the auction system for cross border traders so that they can access foreign currency on the formal market.

“To cross borders, we urge all members to open NOSTRO and VISA accounts to be able to access forex. The VISA accounts help them to avoid traveling with hard cash which risks them from criminals,” he said.

He urged members to follow the testing regime when borders open, for them to be compliant to the health guidelines put in place to slow the spread of the virus.

“When the borders finally open for the cross border traders we urge them to utilise the platform of being tested before and prior to their journey to protect themselves and their customers.

“This will help us to be compliant to the Ministry of Health protocols that have been put in place to avoid the spread of the virus,” said Dr Zivhu.

Economists have already noted that will almost all the formal sector businesses in the auction system the black market is seeing reduced demand for the diaspora remmittences that feed the pavements, and so the modest demands of cross-border runners is unlikely to have any impact. – Herald