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Prosper Ndlovu, [email protected]

ZIMBABWEANS have no reason to panic or speculate about macro-economic stability post the election period as the Government will maintain its tight fiscal and monetary policy stance to guarantee stakeholder confidence in the economy.

The need to entrench market discipline and consolidate macro-economic stability is critical as the country forges ahead with its economic transformation agenda riding on the comprehensive reforms ushered in since the coming in of the Second Republic.

Following his emphatic victory in the just-ended election, President Mnangagwa, who was officially inaugurated for the second term in office on Monday, has expressed his commitment to continue driving the development momentum in line with Vision 2030 — pledging fulfilment of all his electoral promises.

In a statement yesterday, the Treasury allayed fears over the possibility of historical exchange rate volatility and inflationary pressures, affirming its commitment to maintaining tight policy measures to guarantee economic stability. Considerable progress has been achieved in fostering domestic macroeconomic stability through the implementation of a broad range of fiscal and monetary stabilisation measures, said the Treasury.

Pursuant to the measures announced on May 29, 2023, the official exchange rate has strengthened from about US$1: ZWL$6 900 to US$1: ZWL$4 500, highlighting the positive impact of policy interventions by the Government, it noted. As a result, month-on-month inflation, among other positives, has dropped significantly from +30 percent in June to -15 percent in July as businesses also responded by reducing prices of goods and services, thereby increasing consumer purchasing power.

“Government, in this post-election period, is therefore committed to ensuring that such macro-economic stability endures and is sustainable through implementation of sound macro-economic policies, to achieve envisaged economic growth targets,” said the Treasury.

“In this regard, the Government will continue with the tight fiscal and monetary policy measures.”

These include the adoption of all external liabilities being funded transparently through the national budget, which has been completed.

Government has also increased to 100 percent the retention of domestic foreign currency sales, which 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 agency fees in local currency will be maintained, while additional measures are under consideration.

The Treasury has also affirmed its commitment to making sure that there is no backlog in the foreign currency auction system and pledged to continue supporting the auction system with foreign currency and paying winning bids at the auction within 24 hours of award. “In order to encourage banking of foreign currency, which is mainly in the informal sector while promoting use of the local currency, Government will; continue promoting 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,” said the Treasury. 

To mop up excess liquidity already injected into the economy, Government will continue with its policy interventions like the issuance of Treasury bills in conjunction with appropriate monetary policy tools being implemented by the RBZ, said the Treasury. 

The strengthening of surveillance and monitoring by the Financial Intelligence Unit (FIU) in order to stem speculative activity in the economy will also be sustained, it noted.

The issuance of gold coins and gold-backed digital tokens as a store of value and for transaction purposes, while supporting financial inclusion will also be continued. 

The Government will further continue with efforts to mop up excess liquidity in the market and regulate payments to Government contractors.

“Government remains fully committed to the maintenance of macro-economic stability and will continue to revive the purchasing power of the Zimbabwe dollar and the restoration of trust and confidence in the economy,” said the Treasury.