Govt contradicts itself on USD pricing model

Harare – In an interesting development that exposes inconsistencies within the government’s structures, the Ministry of Finance and Economic Development on Friday moved in to dismiss the recent USD pricing models announced by some government ministries and departments as the local RTGS$ value continue to depreciate.

This followed a recent announcement by the Ministry of Lands, Agriculture, Water, Climate, and Rural Resettlement that charge of goods and services will be now in USD or the prevailing interbank rate with effect from 29 May 2019.

Likewise, the National Railways of Zimbabwe published a similar notice to its freight customers indicating that it will be taking a similar route with effect from 1 June 2019.

In a press statement published on Friday, the Ministry of Finance dismissed the developments saying that it has not approved any changes to the prevailing levels of fees and payment modalities.

“Thus, Government fees, charges and levies remain at the approved RTGS dollars that were formally communicated to each Ministry, Department or Agency,” the Treasury said.

It further indicated that Section 78(1)(r) of the Public Finance Management Act [CAP 22:19] empowers Treasury to prescribe or issue instructions or directions to Ministries, whether individually or collectively, concerning the determination of any scales of fees, other charges or rates relating to revenue accruing to the Consolidated Revenue Fund.

With government’s ministries and departments reverting to the USD pricing model, this would no doubt set a precedent to the broader market where some businesses are already charging hard currency for purchase of goods or services as the local money continue to lose value both on the interbank and parallel foreign currency exchange markets.

The country is currently facing a major economic breakdown since suffering a hyperinflation in 2008 as inflation continue scaling up with annual inflation reaching 75 percent in April.

IMF has projected a recession saying that the economy will contract by as much as 5.2 percent this year, widening fears that the country is heading towards a second hyperinflation within a period of two decades.

Government however, remains adamant that it will facilitate a positive turnaround with both the finance Minister Professor Mthuli Ncube and the central bank governor Dr John Mangudya declaring that inflation will begin to fall towards year end.

Equity Axis News

Raynold M

Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.