Mangudya Backs Measures Announced By Mthuli To Stabilise Exchange Rates, Prices
Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya said that the measures announced by the Ministry of Finance and Economic Development on Thursday to stabilise the exchange rate and prices will support the issuance of gold coins and tokens by the central bank.
On Thursday, Treasury lifted restrictions on the importation of 11 basic grocery items, while granting companies 100 percent retention of domestic foreign currency sales as part of measures to stabilise the exchange rate and prices.
Speaking to The Sunday Mail, Mangudya said the measures introduced by Treasury last week will promote deposits into the banking sector. He said:
The new measures announced by the Ministry of Finance, including the 100 percent retention of domestic foreign currency earnings, are for three reasons, which means, for starters, companies can now bank their money (forex).
They were not banking their money, so the new measure promotes deposits into the banking sector and increases liquidity in the banking sector.
Also, companies can now use their own money for importation, thereby reducing demand for foreign currency on the auction system.
This buttresses and supports the issuance of gold coins and tokens, as it seeks to reduce the demand for foreign currency.
Mangudya also said the newly introduced gold-backed digital tokens valued at more than ZWL$14 billion were taken up by the market last week.
He said the huge demand for gold coins and digital tokens could help remove excess liquidity and stabilise the Zimbabwe dollar.
Persistence Gwanyanya, an economist and member of the central bank’s Monetary Policy Committee, said:
Retailers and wholesalers see the gold digital tokens salvaging their businesses from the accelerated depreciation of the local currency.
They have been losing competitive advantage to small and informal businesses that have been rejecting the currency and insisting on transacting in US dollars.
Given their visibility and position in the market, it is very difficult for them to reject the local currency without consequences.
The acceptance of digital gold-backed tokens by key wholesalers and retailers will be a huge relief to the transacting public.
In line with the measures announced by Finance and Economic Development Minister Mthuli Ncube on Thursday, the Government on Friday suspended import duty and import value-added tax (VAT) on 10 basic grocery items: maize meal, rice, milk, flour, salt, cooking oil, petroleum jelly, toothpaste, bath soap and washing powder.
The suspension of the import duty and import VAT shall be valid for six months from 12 May 2023.
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