Harare – In a statement on Wednesday, Finance and Economic Development minister, Mthuli Ncube said further to the various measures that Government is putting in to accelerate economic reforms that are necessary to right sizing the economy, it is critical to restate Government’s great commitment to reducing fiscal imbalances which are the root cause of the many challenges the economy is facing.
The economy of Zimbabwe shrunk significantly after 2000, resulting in a desperate situation for the country – widespread poverty and a 95 percent unemployment rate.
Zimbabwe's participation from 1998 to 2002 in the war in the Democratic Republic of the Congo set the stage for this deterioration by draining the country of hundreds of millions of dollars.
The new treasury boss inherited a cocktail of challenges including cash shortages and the proliferation of foreign exchange parallel market rates which have a negative effect on prices.
“These challenges require that Government position the economy on a strong footing by implementing reforms that include cutting on government expenditure, working towards import parity pricing system, increasing efficiency on government delivery systems and fast-tracking the State Owned Enterprises reforms, among a host of reforms.
“These reforms shall be accompanied by a strong and sustainable currency reform system which will follow after the execution of the above reforms,” said Ncube.
He said this is necessary to ensure that any currency reform programme that the Government would put in place is effective and that it has minimum disruption to business.
Accordingly, Ncube said in view of the need for an orderly currency reform programme that will be followed when the economic fundamentals are right to do, the country shall continue to use the multi-currency system which was put in place by Government in 2009.
“This system entails that foreign exchange earners are not prejudiced of their regulatory foreign exchange receipts and that those who do not earn foreign exchange have access to foreign exchange through the banking system as is per the current policy of foreign exchange management system. In parallel, the Reserve Bank shall continue to maintain adequate resources for the import of essential commodities.”
Additionally, Mthuli said over and above the Nostro Deposit Protection Guarantee from Afreximbank, Government is also reinforcing Nostro foreign currency accounts with a statutory instrument to guarantee that these are private deposits, and neither the Reserve Bank nor government has any access to them.
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