Zimbabwe has no shortage of foreign currency, but rather a problem of allocating foreign currency through formal systems, now being addressed by measures that include the auction system, Finance and Economic Development Minister Professor Mthuli Ncube said at the weekend.
Speaking during the meeting of the Mashonaland West Zanu PF Provincial Coordinating Committee in Chinhoyi on Saturday, Prof Ncube said while the nation was moving towards economic transformations through its key sectors including farming, mining, ICT and tourism, the stability of the local currency and more foreign currency inflows would eradicate some anomalies existing in the retail and financial sectors.
“We don’t have any shortage of foreign currency as a country. But we just have a shortage of foreign currency through the formal channels. This is, however, what we are fixing through the auction system and new more favourable fundamentals to address the economic challenges.
“As a nation, we were worried and had envisaged a drop in remittances by as much as 10 percent. But God surprised: our remittances are actually up 30 percent. So we have enough foreign currency which means we just have an allocation problem. But we are also fixing that,” he said.
On June 23, the Reserve Bank of Zimbabwe (RBZ) replaced the interbank market with weekly foreign exchange auctions to determine the Zimbabwe dollar exchange rate.
The new system has generally led to the rebuilding of market confidence, improved access to foreign currency for companies, stabilised the exchange rate and prices as most companies applying for forex getting it.
The Tuesday auctions are aimed at selling foreign currency retained by exporters, which must either be used or sold within 30 days, at the discretion of the exporter or be subject to compulsory sale after 30 days.
Prof Ncube said the stability brought by the auction system to the local currency, making it stronger. Government measures are expected to ensure that exchange rate and prices remained stable.
He was responding to a member of the PCC committee who had raised concerns over extra charges that people were incurring to access foreign currency from banks for buying farming equipment and machinery outside the country.
“As a Government, we have always desired to improve the salaries and welfare of the civil servants and talks are also underway to discuss the US$75 Covid-19 allowance. We also expect private players to play their role in improving salaries of their workers.