Zivanai Dhewa
Industry has come out in defence of Government’s implementation of Statutory Instrument 127 of 2021 (SI 127 of 2021), describing it as a sure way to maintain sanity and confidence in the financial sector.
Speaking through a telephone interview Economic Analyst Nomvelo Ngwenya, said the Confederation of Zimbabwe Industries’ (CZI) Industry Policy Response to SI 127 of 2021 is mired with contradictory facts and clearly it represents a tiny fraction of the industry.
“The CZI Industry Policy Response to SI 127 of 2021 agrees that the Foreign Currency Auction system managed to stabilise the economy, build confidence in the country’s economy and significantly reduce inflation by a big margin.
According to the CZI IPR to SI 127 of 2021, “The initial impact on headline inflation has been most pronounced, with month on month inflation decelerating from above 30% in June/July to an average of 2.2% for the months March through to June 2021. On current trends, headline inflation was on course to decline further to 55% by July and 30 % by December 2021. Such significant progress would have laid a strong foundation for further inflation deceleration to levels well below 20% by December under the Policy scenario and further towards single digit level by 2023.
Ngwenya quoting CZI IPR to SI 127 of 2021, “Under the Policy scenario and subject to policy refinements to improve the FX Auction System, widen access and narrow down the premium, the Policy scenario of sustained inflation decline is achievable, this would be buttressed by strong fiscal policy stance and tighter monetary policy.
“SI 127 of 2021 is Government fine-tuning and plugging the holes which are afflicting the Foreign Currency Auction system.
“It is absolutely necessary for industries that benefit from the Auction system to declare their invoices and receipts as proof that the money they bid for is being used correctly and does not find its way to the black market,” Ngwenya said.
Ngwenya added that, CZI IPR to SI 127 of 2021 cleary represents a tiny fraction of the Industry, because from what I know, most industries are complying with the Government directive to regularise their systems so that they can allow for both US$ and ZW$ receipting.
“OK-Zimbabwe, N-Richards and TM-Pick n Pay among many other retail outlets have started installing systems that indicate transactions of tender, whether ZW$ or US$.
“Total fuel station is among other fuel stations that are also complying with the directive, currently accepting ZW$ until they have regularised their systems,” said Ngwenya
Explaining further, Ngwenya said, “The Foreign Currency Auction system needs to have enough US$ for bidding, as industries receipts its sales in US$ it automatically is able to remit the true US$ component in taxes, money that Government can reserve for the auction.
“It was very difficult for the US$ component receipted in ZW$ as was the case to be declared to the Government for tax deduction. This was one loophole that was abused. SI 127 of 2021 ensures that each currency is receipted and taxed in itself.
“It therefore boggles the mind why the CZI would write a damning report on SI 127 of 2021 which Government has put in place to protect the confidence in the economic sector and also to bring a level playing field to all of industry,” Ngwenya concluded.
Meanwhile, the President of the Confederation of Zimbabwe Retailers (CZR) Denford Mutashu has pledged to support Government in the efficient and effective implementation of SI 127 of 2021. CZR President Mutashu said the SI deals with rampant indiscipline among beneficiaries of the Reserve Bank Auction system.
Through the implementation of the Dutch Foreign Currency Auction system, as one of the economic reforms, Government has been able to significantly reduce inflation, eradicate the use of black markets as well as bring sanity to the foreign currency market.
