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Oliver Kazunga, Senior Business Reporter
THE Confederation of Zimbabwe Industries (CZI) has urged authorities to maintain the existing foreign currency auction system which it says is transparent and free from manipulation.

On June 23 this year, the Government through the Reserve Bank of Zimbabwe (RBZ) introduced the weekly Foreign Currency Auction Trading System with a view to avail the much-needed forex to companies for the importation of raw materials.

Prior to the forex auction trading system, the market experienced unstable exchange rate both on the formal and informal markets.

The Zimbabwe dollar has for a long time maintained its stability against the United States dollar trading at ZWL$81,35.

Many businesses had, before the introduction of the existing system, been buying forex on the black market at high premiums and that was adversely affecting their competitiveness.

In its first review of the foreign currency auction trading system, CZI acknowledged that the currency trading platform had brought a lot of positives on the market.

“CZI is of the opinion that the foreign currency auction trading system has ushered in a breath of fresh air and the economy has derived many positives from the newly instituted foreign currency management system.

“The positives include the stability of the exchange rate on both the formal and informal markets as well as the slowdown in inflation. There has also been increased access to foreign currency by businesses,” it said.

The industry representative body urged authorities to adhere to the current practice where there is no manipulation, interference and policy inconsistency.

The CZI also called for the fine-tuning of the RBZ guidelines governing trading on the auction so as to remove any confusion among stakeholders. The auction, according to CZI, can also be strengthened by balancing money supply and demand, practising fiscal prudence and monetary discipline as well as levying taxes and fees in local currency.

Meanwhile, CZI has appealed to Government to avoid introducing new taxes and also realign the tax legislation with monetary policies in the 2021 national budget.

Finance and Economic Development Minister Professor Mthuli Ncube is expected to present the upcoming fiscal policy statement later this month.

According to a document on CZI 2021 national budget submissions, the industrial lobby, underscored the need to reduce export retention to avail more forex to companies to stimulate local production.

“Due to a depressed aggregate demand environment, business is asking Government not to introduce new taxes as well as reduce the export retention,” it said CZI.

Among other statutory obligations, industry and business are required to contribute corporate income tax and the 2 percent Intermediated Money Transfer Tax (IMTT), which the Government introduced in October 2018.

CZI highlighted that the 2 percent IMTT reduces disposable incomes thereby reducing funds for investment.

“It is also considered as a penalty for doing business,” it said, adding that the Pay As You Earn (PAYE) needs to be adjusted periodically in order to preserve purchasing power of the consumers.— @okazunga.