Forex cushion to stabilise economy
ZIMBABWE is not sliding back into dollarisation after Government announced interim US dollar allowances for civil servants, but rather these allowances are a way of cushioning civil servants, Finance and Economic Development Minister Prof Mthuli Ncube has said.
Prof Ncube says the US$75 Covid-19 allowances and 50 percent salary increase awarded to civil servants last week will not affect the national Budget projections.
He said Treasury was already working on an $18 billion package to revive all sectors of the economy.
Government last week awarded a 50 percent pay rise to civil servants and pensioners with immediate effect, together with a flat non-taxable US dollar denominated Covid-19 allowance for the next three months.
Speaking on the sidelines of a tour of the site designated for a Zimra dry port, about 10km out of Masvingo, along the Masvingo-Harare highway recently, Prof Ncube said no country can grow its economy without using a component of domestic currency as this would be the bedrock upon which the economy is drip-fed and grown.
“We cannot print the US dollar here in Zimbabwe and we need the domestic currency if we are to grow the economy. If you move around big supermarkets in big cities you will see 30 or so new products manufactured locally and this is the import substitution that we are pushing for because it will create jobs, while also growing our economy and saving foreign currency.”
He said the authorities, through the Financial Intelligence Unit under the RBZ, were working flat out to stabilise the local currency by plugging loopholes used by elements who abuse mobile money platforms.
Prof Ncube said civil servants and pensioners will not get the allowances in hard cash, but would be issued with cards to purchase goods and services locally using their US dollar allowances.
“We discourage the withdrawal of these funds in the form of cash because we are worried that this might fuel the parallel market. The money should circulate in the formal market,” he said.
He said concerns over the interbank rate will be addressed by the foreign currency auction system that will start tomorrow.
“Our people should be patient and not rush to make judgment. They must wait for tomorrow to see what the bank rate will be after the auction system for foreign currency. I don’t know what it will be in the future. It is a function of market forces, demand and supply, so let us wait and see.”
Minister Ncube last week also toured Beitbridge Border Post where he said more interventions will be rolled out to address challenges facing most civil servants and Zimbabweans in general.