Business Reporter
FINANCE Minister, Mthuli Ncube Thursday moved to enact another set of measures to defend the waning Zim- dollar currency in the wake of internal shocks triggered by market indiscipline among other factors.
The set of measures comes at a time when the parallel market exchange rates have weakened in the recent weeks.
Measures announced by Mthuli Ncube include the following;
1.100% Retention of Domestic Foreign Currency Earnings
In order to promote the banking of domestic sales foreign currency in the banking system, the Reserve Bank of Zimbabwe will with effect from May 15 2023 exempt all proceeds from domestic sales in foreign currency from the 15% surrender requirement.
2. Adoption of all external loans by Treasury
All external loans to the Government of Zimbabwe will now be transferred from the Reserve Bank of Zimbabwe to Treasury.
3. Enhanced Foreign Exchange Auction System.
The Foreign Exchange Auction System will be further fine-tuned and will now auction a pre-announced envelope, on a pure Dutch auction basis.
4. Lifting of all restrictions on importation of basic goods.
In order to enhance the supply of basic goods to the public, all basic goods will no longer be subject to import licences, and will also come into the country free of import duties and taxes.
5. Supportive Interest Rate Environment.
Domestic interest rates remain a variable of focus and are on the main tools available for monetary authorities to discourage speculative borrowing and to reduce the velocity of the ZWL and thus promote stability. Measures to restore real savings rates in the economy are therefore necessary.
The Reserve Bank of Zimbabwe, through the Monetary Policy Committee, shall continue to review the domestic interest rate framework to allow domestic currency savings to be above the perceived rate of expected devaluation for holding ZWL balances, to be attractive to savers.
In the short term, Government needs to immediately cause short term interest rates of tenors up to six months to rise sharply, with longer rates remaining low. This will squeeze out speculative demand for both ZWL and USD.
Local currency levies and fees charged by its affiliated agencies and service providers are to be paid in local currency.
