Business Reporter
TOP economist ,Doctor Prosper Chitambara has blamed Finance Minister Mthuli Ncube’s bad budget for fueling the current Zim dollar depreciation.
This comes on the back of revelations that the local unit traded at 6,192 per 1 U.S. dollar on Jan. 2, but has depreciated to 8,746 as of Jan. 17, according to the Reserve Bank of Zimbabwe daily exchange rate updates.
Tracing the root causes of the depreciation, Chitambara fingered the chaotic budget statement delivered by Finance Minister ,Mthuli Ncube as chief among the causes of the current depreciation.
“I think it was not well received, in particular the raft of tax measures that were announced by the minister.
“So that kind of eroded confidence in the economy, and we saw the local currency actually being affected in terms of its valuation, and that trend has also continued even into the year,” he said.
Zimbabwe National Chamber of Commerce Chief Executive Officer Christopher Mugaga said the depreciation could be attributed to injected liquidity by the government to pay for services and different contractors.
In addition, he said the U.S. dollar has become a haven for investments, thereby creating demand for the greenback.
“Most employees, both from the public and private sectors, whenever they earn their salaries, they tend to make a beeline to secure U.S. dollars as a way of locking value in their currency, and in the process this has been creating a typical artificial exaggerated demand for the greenback, strengthening it against local currency,” Mugaga said.
The Confederation of Zimbabwe Industries (CZI) estimating that budget measures could trigger the collapse of thousands of companies and put nearly 40 000 jobs at risk.
The ZW$54 trillion budget — the first to trigger palpable outrage in about 20 years — introduced tough demands to companies, the informal sector and citizens, including a wealth tax and sugar levy.
