Zimbabwe: Economic Crisis - Mthuli Ncube Announces Further Measures to Contain Runaway Inflation - Second Major Policy Statement in One Month

29 May 2023
New Zimbabwe (London)
By Alois Vinga

Finance Minister Mthuli Ncube has announced a new series of measures to stabilise the economy amid hyperinflation fears.

This comes barely two weeks after the Treasury boss scrapped duty on all basic commodities imports and ordered transfer of government loans from the central bank as part of a cocktail of measures aimed at strengthening the ZWL which is fast losing value.

In the fresh set of measures the weekly auction will be limited to US$5 million, government agencies will 'substantially' collect fees in ZWL, all customs duties are now payable in local currency except designated 'luxury goods' and the liquidation of all the foreign currency earned through exports which remain unused for a period of 90 days among other measures.

Ncube ordered the liquidation of export proceeds earned from exports as a strategy to push holders of huge idle US$ deposits to circulate their money into the economy and avoid artificial shortages.

"All export proceeds that remain unutilised after 90 days will be liquidated onto the interbank market. The weekly auction will be limited to a maximum of US$5million.

"As from 1 June 2023, winning bids at the auction will be paid within 24 hours of the award," he said.

All manufacturers selling general goods such as cement, milk, soft drinks for the export market, were ordered to charge Value Added Tax which is refundable by Zimbabwe Revenue Authority (ZIMRA) after exporting.

Government also committed to continue to sterilise excess liquidity already injected into the economy through issuance of Treasury Bills, while charging the Reserve Bank Zimbabwe (RBZ) to sterilise excess liquidity through appropriate monetary policy tools.

Ncube also tabled plans to strictly monitor illicit activities like the externalisation of funds from Zimbabwe

"With regards to externalisation of funds and transfer pricing, the government will strengthen surveillance and monitoring, complemented by a robust foreign currency payment system and information sharing system between financial institutions and ZIMRA.

"Government will continue to review civil servants salaries and allowances in line with the above developments and policy measures, including increasing the threshold of the local currency IMT tax," added Ncube.

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